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3 Reasons Foreign Stock ETFs Can Outperform U.S. ETFs

Stocks in this article: EWU FEZ IEV EZU HEDJ DXGE DXJ

NEW YORK (ETF Expert) -- Some writers have expressed little surprise by the extent of the runup in U.S. stocks. It's one thing to be bullish. It's quite another to look at 28% year-to-date gains for the S&P 500 as customary.

Super-sized annual percentage jumps occur more frequently in the initial year of a bull market. That's why one can look upon the 38% in 1975, 26% in 1991, the 26% in 2003 and/or the 23% in 2009 as commonplace. Yet, a 28% rise in the fifth calendar year of a stock bull? One would have to regard the move as having more in common with the irrational exuberance of the latter half of the 1990s.

That's not to say that the monster move to the upside here in 2013 is entirely without reason. The U.S. Federal Reserve has given global investors plenty of ammunition for remaining long U.S. stocks. Nevertheless, the premier opportunities going forward may reside with risk assets that are not only trending higher but have additional advantages.

Here are three justifications for shifting some cash and/or U.S. stock dollars over to foreign stock exchange-traded funds:

1. Value. U.S. corporate earnings have been slowing in recent quarters. Sales have been flat. Meanwhile, share prices have soared through the proverbial roof.

On the flip side, corporate earnings in places like the United Kingdom are rocketing. An investor can tap UK potential with iShares United Kingdom (EWU). A series of higher highs for EWU has essentially confirmed a strong uptrend since July.

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