The SPDR S&P 500 (NYSE:
) is up nearly 12 percent year-to-date indicating investors have
been, for the most part, rewarded for their confidence in U.S.
stocks. Combine that with the goings on in the Eurozone, most of
which have been negative, and dour performances by many of the
largest emerging markets, and it looks like U.S. stocks are the
place to be.
That does not mean investors should have no global exposure.
In fact, some developed market
have outpaced SPY this year
. And yes, that group extends beyond the obvious winners, those
being Japan ETFs.
Those not willing to make country-specific bets in their
efforts to add international exposure can accomplish the
objective through an array of so-called "ex-U.S." ETFs. Here are
a few such funds that brokers may have forgotten about.
iShares MSCI ACWI ex US Index Fund (NASDAQ:
) The iShares MSCI ACWI ex US Index Fund may not get a lot of
airtime, but this is not a small, thinly traded ETF. ACWX has
$1.42 billion in assets under management and average daily volume
of almost 240,000 shares.
Year-to-date, ACWX has returned 4.2 percent. That may not
sound impressive, particularly compared to U.S. stocks. More
concerning is that ACWX has only been able to generate a return
of 4.2 percent when Japan accounts for 15.4 percent of its
country weight. Australia, another strong equity market, checks
in at almost 6.4 percent.
This is ACWX's big problem: The attractive exposure to Japan
and Australia is being canceled out by laggard markets such as
Canada, France, Germany, South Korea, China and Brazil. Combined,
those countries represent about 30 percent of ACWX's. Of the
major ETFs tracking that group, only the Germany and France funds
are up year-to-date and only modestly so.
SPDR S&P World ex-US ETF (NYSE:
) The SPDR S&P World ex-US ETF makes for an obvious rival to
ACWX and investors have to dig deeper to make a decision between
the two ETFs because both charge 0.34 percent per year. GWL is
the smaller of the two, though it is by no means small with over
$610 million in AUM. In fact, GWL has been rapidly growing,
having added $298.2 million in assets over the past 12 months,
according to Index Universe data
GWL is up 4.2 percent year-to-date, but the ETF faces a
similar dilemma to ACWX. The slight out-performance comes by
virtue of slightly large allocations to Japan and Australia (a
combined 28 percent). However, Canada, France, Germany and South
Korea combine for 27.4 percent of GWL's weight.
Additionally, both GWL and ACWX feature the U.K. as their
second-largest country weight. With that country flirting with a
triple-dip recession, both ETFs need Japanese equities to
continue soaring to buffer against a potential decline in U.K.
WisdomTree Global ex-US Growth Fund (NYSE:
) With $882. million in AUM, the WisdomTree Global ex-US Growth
Fund is the smallest of the ETF's highlighted hear. The fund is
also down 2.8 percent year-to-date, underscoring the notion that
investors are apprehensive about global growth stocks.
Like its rivals, DNL has some country allocation issues,
namely a combined 29.4 percent going to the U.K., Brazil, Germany
and South Africa. Additionally, while the allocations are small,
DNL features exposure to all the PIIGS nations except Greece.
There are some high points to DNL, though. First, although the
ETF's do not imply as much, this is a dividend ETF. DNL tracks
the WisdomTree Global ex-US Growth Index (
), which weighs companies annually based on annual cash dividends
paid. Since the index was created in 2008, it has slightly
outpaced the MSCI AC World ex-USA Growth Index,
according to WisdomTree data
Another highlight of DNL, and one that investors can only hope
increases when the ETF next rebalances, is its exposure to some
of this year's better emerging markets. Thailand, Indonesia,
Mexico, Turkey and the Philippines combine for about 15.3 percent
of the ETF's weight. Increased weights to those countries could
boost DNL's returns, but there no guarantees those weights will
For more on ETFs, click
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