International ETFs to Mark Next Decade

NEW YORK (TheStreet) -- A blog-aggregation site asked me about my expectations for the stock market in 2010. An ongoing theme for the past five years in my writing and in the portfolios I manage has been that investors ought to slowly increase foreign exposure.

That has been crucial over the course of the past decade and, as things have perhaps gotten worse in the U.S., the notion of greater foreign exposure could be even more important in the next decade.

One reader said: "Investing in big multinationals gives me all the exposure I need for global markets." He went on to cite Exxon Mobil(XOM), Proctor & Gamble(PG) and Boeing(BA) as examples. This argument comes up often and points out a vital issue: Big multinationals benefit from business overseas but rarely serve as proxies for investing overseas.

Exxon Mobil hasn't provided much in the way of performance leadership or correlation to foreign oil companies. Exxon Mobil's stock has fallen 14% this year, while the WisdomTree International Energy Fund(DKA) is up 29% and Norwegian oil company Statoil(STO) is up 50%. Over five years, Exxon Mobil has risen a little less than 40%, while Statoil has increased 60%. From Statoil's NYSE debut in October 2001 to today, the stock has climbed about 300%, compared with Exxon Mobil's 80%.

According its 2009 annual report, Proctor & Gamble generates 32% of its sales from developing markets. There are no emerging market sector exchange traded funds for the consumer staples sector to provide a useful comparison. But there are ETFs for Brazil and China whose larger holdings can be compared to Proctor & Gamble. This year, China Yurun Food Group has advanced 120%, Want Want China Holdings has risen 60%, and Proctor & Gamble is little changed. Those two Chinese stocks are the two largest staples holdings in the new GlobalX China Consumer Fund(CHIQ). The two largest staples stocks in the iShares MSCI Brazil Fund(EWZ) are Companhia de Bebidas das Americas(ABV), which is up 120%, and Brasil Foods, up 35%.