The first seven months of 2010 have certainly had their share of drama, especially for ETF funds and emerging market stock investors. The drama has been particularly heavy when it comes to international stocks, as many of last year’s best-performing emerging markets have been some of this year’s biggest dogs.
China is probably the best example of a high-flyer in 2009 that’s cratered in 2010, but countries such as Australia, France, Germany, Italy and Spain also have taken their lumps. But as the saying goes, there’s always a bull market somewhere, and that’s particularly true when assessing country-specific exchange-traded funds (ETFs). So, if you thought the bulls weren’t running overseas, think again.
Here are the top five country-specific ETFs through the first seven months of the year.
1) Global X/InterBolsa FTSE Colombia 20 ETF (NYSE: GXG). Global X Management Company and Colombian broker InterBolsa S.A.Comisionista de Bolsa teamed up to launch this first Columbian ETF back in 2009. Apparently, they knew what they were doing, because GXG has posted a year-to-date gain of about +35% in 2010 (through 7/30), making it the best performing country-specific ETF so far in 2010. When you own GXG you basically own the top 20 companies based in Columbia, including oil giant Ecopetrol (NYSE: EC) and Columbia’s leading financial company Bancolombia (NYSE: CIB), both ADRs traded on the NYSE.
2) Market Vectors Indonesia ETF (NYSE: IDX). Indonesia was the third fastest-growing economy out of the G-20 member nations in 2009, and that growth is being reflected in the value of IDX in 2010. The fund is up +26% year to date, making it the second best performing country-specific fund so far this year. Last quarter IDX boasted a nice sector mix, including a 25.4% exposure to financials, a 15.7% exposure to materials, a 12.5% exposure to the consumer sector and another 12.5% exposure to the energy space. These sectors are taking full advantage of the strength of the country’s economy, and hence the fantastic price performance of IDX in 2010.
3) iShares MSCI Thailand Invest Mkt Index (NYSE: THD). Coming in third in top country-specific ETF sweepstakes is THD, with a year-to-date gain of +18 (as of 7/30). Thailand has one of the fastest-growing economies in Southeast Asia, and thanks to iShares investors now are able to easily gain exposure to Thailand’s economic boom. This ETF is heavily awaited to the financial sector (34.92%) and the energy sector (32.16%), but it also provides exposure to materials, consumer staples and telecommunications companies based in Thailand.
4) iShares MSCI Malaysia Index (NYSE: EWM). Malaysia is Southeast Asia’s second-wealthiest country with a per capita gross domestic product (GDP) of $8,209. The country’s economy is expected to grow at a pace of 5.6% in 2010 and 5.8% in 2011, and the smart money has certainly embraced these metrics so far this year. EWM has jumped +15% year to date, putting it fourth on the list of top performing country-specific ETFs. Interestingly, Malaysia has developed into the world’s largest Islamic banking and financial centers, and as such EWM’s biggest sector exposure is in financials (31.21%). However, the ETF also offers exposure to industrials (18.81%), consumer staples (13.47%) and many other prominent sectors.
5) iShares MSCI Turkey Invest Mkt Index (NYSE: TUR). The final ETF making the list of top performers is TUR, posting a healthy +15% gain over the first seven months of the year. Yes, most European equity markets have faltered this year, but not Turkey. Europe’s sixth largest economy boasts a per capita GDP of more than $8,700, and that’s much stronger than the vaunted BRIC (Brazil, Russia, India, China) nations. Financial stocks (52.19%) make up the bulk of this ETF’s holdings, but the fund does include some industrial (11.38%) and consumer staple (9.53%) stocks.
While bellwether international ETFs such as the iShares MSCI EAFE Index (NYSE: EFA) have faltered so far in 2010, (EFA is down -6% year to date) you can still find big winners in various corners of the globe — as these top five country-specific ETFs clearly show.
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