The year 2013 can easily be tagged as a period of broad-based
global recovery especially in the developed corner of the world.
The U.S. market has gained considerable strength that caused many
to speculate that the Fed's 'QE' slowdown might be around the
corner. U.S. stocks are in record territory so as to reap as much
capital appreciation as they can before the much-anticipated
Gentle numbers are also coming out of Europe with the debt-laden
Eurozone having returned to the growth path in Q2. Though the
region is far from attaining sustainable growth, just the end of a
long-run recession itself is great news.
Consistent growth stories in some key nations like Germany and the
U.K. helped in building up this optimism. There were some hopeful
cues from the region's southern region, as well with the Spanish
and Portuguese economies showing modest growth.
To add to this, the recent cut in benchmark rate to a record low of
by the European Central Bank (ECB) to trigger growth and improve
the inflationary environment also inspires some optimism around the
region's growth trajectory. Notably, the ECB follows a directive to
maintain inflation rates close to 2% which was far behind the 0.7%
inflation rise in October (read:
3 European ETFs Leading the Recovery
The upsurge in developed nations had its ripple effects in the
Asian markets too. Nations like Singapore raised its full-year
growth outlook mainly to reflect the revitalization in the western
world which boosted the export profile of the former.
Another eastern-world titan Japan turned around thanks to its
massive stimulus program which kept its currency low and favored
exports. The Japanese Nikkei 225 Index is hovering around a
six-month peak level (read:
WisdomTree Doubles Down on Hedged Japan ETF
Thus, a look at the top ranked global ETF could be a good idea to
capture the surge in optimism around the macro economy, especially
based on our Zacks ETF Ranking system.
About the Zacks ETF Rank
The Zacks ETF Rank provides a recommendation for the ETF in the
context of our outlook for the underlying industry, sector, style
box or asset class (Read:
Zacks ETF Rank Guide
Our proprietary methodology also takes into account the risk
preferences of investors. ETFs are ranked on a scale of 1 (Strong
Buy) to 5 (Strong Sell) while they also receive one of three risk
ratings, namely Low, Medium or High.
The aim of our models is to select the best ETFs within each risk
category. We assign each ETF one of the five ranks within each risk
bucket. Thus, the Zacks ETF Rank reflects the expected return of an
ETF relative to other products with a similar level of risk.
For investors seeking to apply this methodology to their portfolio
in the global equities space, we have taken a closer look at the
top ranked ACIM. This ETF has a Zacks ETF Rank of 1 or 'Strong Buy'
(see the full list of
) and is detailed below:
ACIM in Focus
Launched in February 2012,
SPDR MSCI ACWI IMI ETF (
is a passively managed exchange traded fund (ETF) looking to
deliver the return of the MSCI ACWI IMI Index that basically
invests in developed and emerging markets stocks.
The fund is an overlooked option in the global equities space with
around $6.0 million in assets. The product also trades in a paltry
volume of about 1,000 shares a day. Being a relatively new entrant
in the ETF world might be a reason for the fund's low level of
popularity and liquidity so far.
Despite lower trading volume, the choice is also a cheaper one as
it charges 25 basis points in fees a year which is quite below the
average expense ratio of about 52 bps in the global equities space.
With 763 stocks in its basket, this fund puts only 6.5% of its
total assets in the top 10 holdings with no company accounting for
more than 0.93% of the total, suggesting very low concentration
risk. Top companies include
) with a combined share of 2.48%.
In terms of sector exposure, the top allocation, financials,
comprise a little greater than one-fifth of the total assets
followed by industrial companies and consumer discretionary making
up around 13% and 12% respectively.
Beyond this, Information technology (10.8%) and Health Care (10.6%)
round out the top five. The Utilities sector (2.54%) gets the least
Style-wise, the fund is a nice mix of growth and value securities
which keep investors away from excessive volatility and ensures
growth too. As much as 89% focus on large caps also calls for
somewhat lower volatility (see
Hedge Your Portfolio with Low Volatility ETFs
ACIM provides investors with a glimpse of the entire world in one
way. The fund invests half of its assets in the U.S. It seeks to
provide international diversification with Europe and Asia-Pacific
accounting for 26% and 13% of the total.
Japan is the priority in the Asian bunch, securing around 8.33%
share of the total, while the better-positioned U.K. gets the
highest exposure of about 8.0% among European countries.
The fund has returned around 25.0% in the year-to-date frame ending
November 27, 2013. ACIM has also returned about 18.5% roughly in
the last one-year period ended September 30, 2013. The fund is
currently hovering near its 52-week high level. ACIM pays out a
yield of 2.03% per annum.
ACIM could be a winner as the underlying countries have bullish
prospects. So, for investors willing to be part of this uptrend,
ACIM may be an interesting choice given the fund's compelling
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