Expanding the Horizon Using ETFs
Ever feel like you’re spinning your wheels trying to figure out this market? Trading in a funk lately? Consider expanding your search and look at opportunities on a macro scale.
I’ve done a little research on using ETFs to get more exposure globally. After all, the U.S. market isn’t the only pond you can fish in.
Take a look at the past two months of data on different country ETFs.
I went back to the March lows to do some comparisons. You may not be surprised to know that the #1 performer YTD has been Brazil (EWZ). It’s up +13.28%. In contrast, SPY is still down -4.11% YTD, even after this nice rally off the March lows.
Even though EWZ has put in a very nice showing since the beginning of the year, it is not without it’s share of volatility. The maximum drawdown has been over -15%. If you’re not willing to hold it through that kind of volatility, you might want to think twice. Trend traders beware getting whipsawed. However, it does set up situations where it can be swing traded.
Other top performers to check out are Taiwan (EWT), up 9.12% (-11.44% max drawdown); Mexico (EWW), up 6.18% (-11.21% max drawdown), and Canada (EWC), +4.27% with a max drawdown of -12.85%. Obviously, these carry a lot of volatility.
More recently, since the March lows, there have been some interesting developments. The number one performing country ETF is no longer Brazil. It’s Austria (EWO), with a 15.89% return since March 7. Drawdown has only been -5.89%, so it is in a trend upward.
Following Austria, in order of RS, with corresponding returns and drawdown are: Singapore (EWS) +15.55% / -6.49%; South Africa (EZA) +13.36% / -9.20%; Brazil, +13.13% / -9.22%; and Sweden (EWD), +13.03% / -5.28%.
In particular, EWO, EWS and EWD are establishing good upward trending action the past two months.
Not to be ignored, SPY has made a nice showing of +8.09% with a -3.24% maximum drawdown.
Another reason to consider these country ETFS is their non-correlation to the U.S. market. These numbers are measured over the past two months.
EWO 43.28% correlated
EWS 90.67%
EZA 36.13%
EWZ 31.95%
EWD 22.33%
Disclaimer: For informational purposes only.
alpha,
Your introduction, and seemingly central argument of traders finding this a difficult market currently [US] raises a question.
If the volatility in the US market is responsible for traders woes, how exactly will trying to trade even higher volatility actually help?
jog
May 8th, 2008 at 1:47 pmDuc, I didn’t read anywhere in the intro that volatility was causing the “funk” or the difficulties.
May 8th, 2008 at 2:18 pmWood,
“Ever feel like you’re spinning your wheels trying to figure out this market? Trading in a funk lately?”
The first two sentences.
Now, what has changed in say the last 8-12 months?
Well volatility.
Thus, would it not be fair to say that trying to trade even higher volatility might not be the answer, assuming of course my interpretation is correct?
“Other top performers to check out are Taiwan (EWT), up 9.12% (-11.44% max drawdown); Mexico (EWW), up 6.18% (-11.21% max drawdown), and Canada (EWC), +4.27% with a max drawdown of -12.85%. Obviously, these carry a lot of volatility.”
jog
May 8th, 2008 at 2:32 pmhey duc,
what the hell does “jog” mean? I think that was before my time. why do you sign every post with it?
May 8th, 2008 at 2:33 pmGunners,
I used to sign a post; jog on grant, then I noticed that jog, was an abbreviation of the preceeding, and it was more time efficient.
jog
May 8th, 2008 at 2:37 pmI fancy.
jog on
May 8th, 2008 at 2:50 pmDuc, after all your recent posts about assumptions, and reading clearly what was written, instead of reading something into what was written, I just thought I’d point out that you both made an assumption and read something into words where it was not stated to be as such. The point being, it is easy to do that, and when one does such a thing, it really does not necessarily point to any sort of nefarious underhanded intent.
May 8th, 2008 at 3:19 pmWood,
Come on now, surely you realise that I would have been aware of the twist of irony, and hedged myself?
I added “SEEMINGLY” to my sentence, to hedge against just such an observation that you are making currently.
I further hedge my proposition by adding “IF THE VOLATILITY…..”
So I respond to alpha on the basis of volatility, but accept that he may not be talking about volatility at all.
However, if that is the case, what exactly does he feel is responsible for “TRADING FUNK”
jog
May 8th, 2008 at 3:30 pmWood, stop gibber gabbing and post something telling me how strong this 1390 support is after sitting on it for 2 days now?
May 8th, 2008 at 3:34 pmCubs, I’ll look at it this evening.
Duc, just pointing out that when the error seems to fall on your side that you hedge by mincing qualifiers, sprinkled liberally. How much time and thought do you really expect someone to put into reading a comment? Again, the point is that 99% of the time that there is nothing nefarious or underhanded about it. The problem is that we are communicating in a medium that can be fraught with problems due to the electronic nature of it and because comments are usually written quickly, without taking time to sprinkle liberally with qualifiers.
May 8th, 2008 at 3:45 pmWhat is going on in Austria?
May 8th, 2008 at 3:47 pmWood,
I spend probably no more time than the average reader, but the difference is the attention to detail.
Additionally, I just knew someone would want to pull me on any comment, thus, I prepared accordingly.
I disagree about the medium…total nonsense, far more attribution can be laid at the door of biases.
Which is exactly why I responded the way I did.
jog
May 8th, 2008 at 3:52 pmDuc, it seems then that you calculated your response and manipulated your subsequent communication for the purposes of you being able to prove a point, which incidentally had nothing to do with the topic of Dawg’s original post.
I’m just saying that my suspicion is that you are the only one, or one of only a small group who spends this much time with responses in the comments section. Therefore, your expectations and the expectations of everyone else are incongruent, which as I’ve said twice before, doesn’t mean anything nefarious or underhanded is being perpertrated.
May 8th, 2008 at 4:04 pmWood,
Two birds with one stone, that’s value.
My comments to alpha, I believe are on topic, as I do believe that he is in point of fact referring to volatility, although he does not explicitly say so.
Of course, additionally I enjoy the psychological game.
jog
May 8th, 2008 at 4:08 pmAnd the winner, by TKO…
WOOOOODSHEDDDDER.
May 8th, 2008 at 4:24 pmDuc
Swing and a miss.
Your focus was on volatility, which was not the point.
My point was simply for us to take a look at opportunities outside of the U.S. market. That is all.
May 8th, 2008 at 5:48 pmalpha,
Well your denial is not unexpected, as, if it was in point of fact volatility that changed the US markets, which of course it has….you would look pretty foolish.
If your point was indeed to simply look outside the US, why then focus on;
*Volatility & drawdowns
*Correlations
jog
May 8th, 2008 at 6:07 pm“What is going on in Austria?”
GW,
The Vienna Stock Exchange has evolved from a small, exclusively regional exchange into a strong, liquid and internationally recognized marketplace. A major contributor to its success was the internationalization of the Exchange.
In the past few years, the exchange has worked actively to woo foreign trading members, and since last year, the exchange has had more foreign trading members (43) than domestic ones (39) for the first time.
Since 2003, monthly cash market trading volume has risen by 828% and is currently around EUR 15bn, with 70% being generated by foreign banks.
Additionally, the Vienna Exchange is targeting foreign investors, with great success. A majority of institutional investors are from the US (27.8%), Great Britain (22%) and Germany (10.1%). This has made the Austrian capital market more attractive to Austrian companies.
May 8th, 2008 at 6:13 pmDuc,
Volitility and drawdowns were presented to simply compare and contrast the risks of other markets outside the U.S.
Correlations pointed to the potential to achieve more diversification away from U.S. based companies.
We shall not belabor these points any further. I get the sense that you enjoy being oppositional.
May 8th, 2008 at 6:18 pmWe shall not belabor these points any further. I get the sense that you enjoy being oppositional.
Is that the nice guy way of saying he’s an asshat?
May 8th, 2008 at 7:59 pm[...] (RSX: 54.30 +4.42%) From Russia, with love. Yet another foreign ETF that is breaking out. If you are into the foreign ETF thing, be sure to check out Alphadawg’s post on ETFs. [...]
May 8th, 2008 at 8:45 pm