While the last few days have been nothing to write home about,
there is no denying that U.S. stocks are off to a solid start in
at the chart of the
SPDR S&P 500 (NYSE:
) indicates the current rally was born in November 2012, enabling
experts and pundits to crow about the out-performance of U.S.
equities for several months now.
Indeed, U.S. stocks outpaced select marquee international
markets in recent months. Plenty of
emerging markets, Brazil among them, have been
. In February, U.S. stocks were better than their Canadian,
German, Mexican and Spanish counterparts, just to name a few
And if Japan, with the benefit of the plunging yen, is removed
from the equation, it might seem as though U.S. equities are
dominating among developed market fare. That is not entirely
true, at least not over the past six months. Have a look at these
that have trounced the SPDR S&P 500 over the past six
iShares MSCI New Zealand Capped Investable Market Index Fund
) Since September 2012, the iShares MSCI New Zealand Capped
Investable Market Index Fund has outpaced SPY by about 260 basis
points and that is no small feat for the lone New Zealand ETF.
Overall, New Zealand's economy is sound, but exports are a
significant part of the equation there. Impressively, ENZL has
risen in tandem with the New Zealand dollar.
Colloquially referred to as the kiwi, the strong currency is
weighing on New Zealand's export industries though to this point,
the central bank there has only mentioned
currency market intervention
and with interest rates at 2.5 percent, low by the country's
standards, another rate cut does not appear imminent.
Those are the red flags concerning ENZL and New Zealand, but
the strong currency does help investors in at least one way. ENZL
has a 30-day SEC yield of 4.11 percent
WisdomTree Australia Dividend Fund (NYSE:
) With just over $78.2 million in assets under management, the
WisdomTree Australia Dividend Fund does not fit the bill as a
large ETF. However, it fits the bill when it comes to delivering
gains that are well in excess of SPY's. Over the past six months,
unheralded AUSE has delivered more than triple returns of
Australia's economy, the world's 12th-largest, has
impressively dodged recession for more than two decades. Unlike
the U.S., Japan, France or the U.K., Australia has an AAA
sovereign credit rating. The most concerning near-term risk to
the Australian investment thesis is declining investment in the
mining sector. The Reserve Bank of Australia expects mining
sector investment to peak later this year, but some stocks such
as BHP Billiton (NYSE:
may already be pricing in cooling mining
AUSE is well diversified beyond the materials sector. At just
9.2 percent of the ETF's weight, the materials group is just the
fifth-largest sector weight in the fund. That provides investors
with some cushion against declining investment in Australia's
mining sector. The key is getting other sectors to pick up the
slack, something RBA has admittedly grappled with to this
iShares MSCI Denmark Capped Investable Market Index Fund
) Neither Denmark nor EDEN have been receiving much attention
from most U.S. investors as of late and the ETF's mere $3.5
million in assets attests to that fact. However,
as has been noted, there is a lot to like with
this Nordic nation
Not only is Denmark not a eurozone member, but its currency,
the krone, is pegged to the euro. That means Denmark has a leg up
on export rivals Norway and Sweden. Due in large part to the
eurozone crisis, investors have flocked to AAA-rated Sweden and
Norway, bidding the Swedish krona and Norwegian krone high.
That has hampered export competitiveness in those two
countries, but not in Denmark. Denmark has defended the euro peg
and has even go so far as to initiate a negative interest rate
policy. Still, EDEN is up 13.3 percent in the past six months and
Denmark also gives investors the benefit of an AAA credit
iShares MSCI Sweden Index Fund (NYSE:
) Despite the strengthening krona, EWD has been an admirable
performer over the past six months, returning more than 11
percent in that time. Swedish economic growth will not wow
investors this year with a government forecast of 1.1 percent,
but that is expected to nearly triple in 2014.
In the fourth quarter of last year, Sweden's GDP was hampered
by declining exports, indicating that the strong currency and
Eurozone woes combined to stifle strong gains in Swedish consumer
spending. With interest rates at one percent, Riksbank does not
have a lot of room to cut. In fact, the central bank is planning
rates steady for another year before looking towards
Overall, the Swedish economy is sound, though not spectacular
and investors get exposure to another AAA-rated country with EWD.
One downside for risk-averse investors: EWD has a beta of 1.83
against the S&P 500.
Some interesting facts about the nations tracked by the four
ETFs mentioned here: Three - Australian, New Zealand and Sweden -
have strong currencies. Three - Australia, Denmark and Sweden -
have AAA credit ratings. Two - Australia and New Zealand - have
high interest rates relative to the rest of the developed world.
None of the four have engaged in quantitative easing, at least
not on par with that of the Federal Reserve.
For more on ETFs, click
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