The 5 Best ETFs in the World

by Alyssa Oursler | August 6, 2013 8:24 am

The 5 Best ETFs in the World

globe The 5 Best ETFs in the WorldLast week, InvestorPlace Editor Jeff Reeves gave a pretty depressing rundown of some of the world’s worst investments[1].

He sorted through country-based ETFs — which are great for direct exposure to a specific region and its underlying investments — and called out the declines of funds representing Brazil, China and other laggards.

Of course, it hasn’t been all doom and gloom across the globe this year.

Sure, the crawling eurozone recovery and slowdown in China have been major headwinds for international investments, but a few countries haven’t had any trouble weathering the storm — and savvy investors have reaped the benefits.

With that in mind, let’s view the globe through rosier eyes, and take a look at the five best ETFs in the world so far in 2013.

#5: Switzerland

ycharts chart 36 300x179 The 5 Best ETFs in the World
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YTD Return: +13.2%

Our first destination is none other than Switzerland — a country The Daily Post UK says[2] “has an economy to aspire to.”

That’s true if the iShares MSCI Switzerland ETF (EWL[3]) is any indication, as its 13.2% climb so far in 2013 is good enough for a top-five spot on this list.

One of the Swiss economy’s main strengths: trade[4]. While a decent chunk of the company’s exports go to names in the European Union, Germany — the strongest of the struggling eurozone — tops that list, and the U.S. isn’t far behind.

Plus, Switzerland just signed a free-trade pact with China that’s expected to boost business[5] even more.

The country also is home to 15 of the world’s 500 largest companies — not a small feat considering Switzerland’s relatively small size. One of those: top EWL holding Nestle (NSRGY[6]), which makes up 17% of the fund.

#4: Netherlands

ycharts chart 35 300x179 The 5 Best ETFs in the World
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YTD Return: +13.3%

Next up: The iShares MSCI Netherlands ETF (EWN[7]) has improved a touch better than 13% so far in 2013, thanks in large part to a double-digit spike during the past month.

The developed nation is one of only four eurozone members that still has a AAA credit rating, while Dutch unemployment is the second-lowest of all members.

Tom Lydon of ETF Trends[8] also suggests investors have sent EWN higher this year thanks to the fund’s large allocation to consumer staples companies. Of course, the slow-and-steady returns of such stocks — including top holding Unilever (UN[9]) — have also been nicely complemented by outsized returns in other sectors.

Second-largest holding ING Groep (ING[10]), for example, boasts an 11% year-to-date climb to go with its 11% weighting, while ASML Holding (ASML[11]) — the next-largest at 9% — blows that away with its 43% gain.

#3: United States

ycharts chart 34 300x179 The 5 Best ETFs in the World
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YTD Return: +20%

So much for the assumption that the biggest growth — and thus the biggest gains — are all overseas! A good chunk of this year’s global growth has actually been home-grown.

In 2013, the S&P 500 has notched 23 all-time highs, while it closed above 1700 for the first time ever late last week[12]. For investors in the SPDR S&P 500 ETF (SPY[13]), that has meant a sturdy 20% year-to-date return.

One reason for the continued gains: The U.S. economy is steadily recovering, but not so fast that the central bank will likely stop its stimulus any time in the near future.

A few top performers in the SPY’s top holdings include tech giant Google (GOOG[14]) and consumer staples stock Johsnon & Johnson (JNJ[15]), which have booked respective gains of 28% and 35%. Of course, top holding Apple (AAPL[16]), weighted at 2.9%, has been no help, contributing 13% losses so far this year.

#2: Japan

ycharts chart 32 300x179 The 5 Best ETFs in the World
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YTD Return: +20.6%

Yesterday, the Global Post published a piece that aptly summed up the state of things in Japan. Michael Moran wrote[17]:

“Following the election of Prime Minister Shinzo Abe last December, a radical change in monetary and fiscal policy has reversed a three-decade decline and put a little pep in the country’s step again.”

A little pep in Japan’s step may be an understatement. Experts remain optimistic about the economy’s recovery even in the face of some recent weaker-than-expected economic data[18] and a looming sales-tax increase[19], and the world’s third-largest economy has been the second-best performance so far this year.

The SPDR Russell/Nomura PRIME Japan ETF (JPP[20]) has gained more than 20% year-to-date and just under 30% in the past 52 weeks. Top holding Toyota (TM[21]) has led the way, as the automaker is outpacing still-solid peers Ford (F[22]) and General Motors (GM[23]). TM soared more than 6% Friday alone after nearly doubling its first-quarter profit, and that jump brought its 2013 gains to just under 40%.

#1: Ireland

ycharts chart 31 300x179 The 5 Best ETFs in the World
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YTD Return: +25.5%

Sometimes, big trouble can actually make for big upside. That’s what seems to be the case across the pond in Ireland, at least. Ireland was one of the countries in the worst shape during the eurozone’s debt crisis, meaning the slightest decline in fear was all it took for a decent bump.

Plus, according to Bloomberg‘s Eric Balchunas[24], the fact that Ireland was one of the earlier adopters of austerity measures also helped. In fact, Ireland’s GDP is expected to expand 1.3% this year and 2.3% next year.

That kind of recovery has translated to a nearly 26% gain in the relatively young iShares MSCI Ireland Capped ETF (EIRL[25]), and a more 54% improvement over the last 12 months. A few notable top holdings include Elan Corp. (ELN[26]), which boasts an 11% weighting and a 54% year-to-date climb — though it’ll be dropped from the EIRL, as it was recently bought out by generic-pharma firm Perrigo (PRGO[27]). EIRL also holds paper packaging company Smurfit Kappa Group (SMFTF[28]), which is weighted at 5% and has gained 61% this year.

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.

Endnotes:
  1. world’s worst investments: http://investorplace.com/2013/07/the-5-worst-etfs-in-the-world/
  2. The Daily Post UK says: http://www.dailypost.co.uk/business/business-opinion/dylan-jones-evans-switzerland-economy-aspire-4924964
  3. EWL: http://studio-5.financialcontent.com/investplace/quote?Symbol=EWL
  4. trade: http://etfdailynews.com/2013/07/16/changes-in-switzerlands-economy-has-created-opportunity/
  5. expected to boost business: http://online.wsj.com/article/SB10001424127887324853704578589350134834158.html
  6. NSRGY: http://studio-5.financialcontent.com/investplace/quote?Symbol=NSRGY
  7. EWN: http://studio-5.financialcontent.com/investplace/quote?Symbol=EWN
  8. Tom Lydon of ETF Trends: http://www.etftrends.com/2013/08/a-developed-market-etf-gem-in-a-quiet-rally/
  9. UN: http://studio-5.financialcontent.com/investplace/quote?Symbol=UN
  10. ING: http://studio-5.financialcontent.com/investplace/quote?Symbol=ING
  11. ASML: http://studio-5.financialcontent.com/investplace/quote?Symbol=ASML
  12. for the first time ever late last week: http://investorplace.com/2013/08/how-long-will-the-sp-500-last-above-1700/
  13. SPY: http://studio-5.financialcontent.com/investplace/quote?Symbol=SPY
  14. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  15. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  16. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  17. Michael Moran wrote: http://www.globalpost.com/dispatch/news/regions/asia-pacific/japan/130802/abenomics-shinzo-abe-japanese-economic-reforms-brics
  18. weaker-than-expected economic data: http://www.bbc.co.uk/news/business-23499006
  19. looming sales-tax increase: http://www.bloomberg.com/news/2013-07-29/kuroda-sees-japan-economy-weathering-planned-sales-tax-increase.html
  20. JPP: http://studio-5.financialcontent.com/investplace/quote?Symbol=JPP
  21. TM: http://studio-5.financialcontent.com/investplace/quote?Symbol=TM
  22. F: http://studio-5.financialcontent.com/investplace/quote?Symbol=F
  23. GM: http://studio-5.financialcontent.com/investplace/quote?Symbol=GM
  24. according to Bloomberg‘s Eric Balchunas: http://accordingtoBloomberg
  25. EIRL: http://studio-5.financialcontent.com/investplace/quote?Symbol=EIRL
  26. ELN: http://studio-5.financialcontent.com/investplace/quote?Symbol=ELN
  27. PRGO: http://studio-5.financialcontent.com/investplace/quote?Symbol=PRGO
  28. SMFTF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SMFTF

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