Investors Hone Country Fund Approach
Of all the nations in the world, no country-focused ETF has been spared in the market shake-up.
The SPDR S&P 500 ETF (SPY), an exchange-traded fund that serves as a proxy for large-cap U.S. equities, is down 37.4% so far this year. The iShares MSCI United Kingdom Index Fund (EWU) has fallen a staggering 43.8%. The iShares MSCI Japan Index Fund (EWJ) and the iShares FTSE/Xinhua China 25 Index Fund (FXI) have plunged 35.4% and 52.3%, respectively. Russia has been among the hardest hit. Investors in the Market Vectors Russia ETF (RSX) have choked on a loss of 71.2%.
So with all this turmoil, how does an ETF investor gain international exposure? There is no easy answer, only arguments for which country or region looks most favorable for a rebound. "There have not been many places in the world where an investor could have escaped the declining equity markets so far in 2008," says Keith Walter, co-portfolio manager of the Artio Global Equity Fund ( BJGQX). "We are struck by the consistency of the negative returns across all major markets without regard to the differences in underlying fundamentals."
In some cases, investors might find ETFs too broadly dispersed. For instance, Walter particularly likes certain pockets of Europe that may be difficult to capture in an ETF. "We are finding companies located in Central and Eastern Europe best illustrate a relative immunity to the current de-leveraging crisis," he says."In Central and Eastern Europe, our favorite companies are located in the strongest countries of the region, like Poland and the Czech Republic," he says. "One such name is Komercni Banka, which is the third-largest bank in the Czech Republic and is majority owned by a major French bank."
Not for the Faint of HeartRecent global market declines have drawn one financial adviser to Asia. "We think some of the Asian economies have gotten beaten up too much relative to some of the other international markets," says Michael Joyce, founder and president of JoycePayne Partners. "If an investor has a risk tolerance that can stomach the volatility, than we think the Asian markets make a lot of sense right now."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV