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Stocks across the globe suffered their worst first half of a year since 2010, wiping out trillions of dollars from the MSCI’s 47-country world index. The iShares MSCI ACWI ETF (ACWI - Free Report) , which targets the global stock market, has lost 0.3% year to date and Vanguard FTSE All-World ex-US ETF (VEU - Free Report) , targeting the international equity market excluding the United States, has shed about 3.9%.
A combination of tariff tantrums, broad tech sell-off, the prospect of end to the cheap money era and cooling growth in many parts of the economy including Europe and Japan led to huge capital outflows from the stocks. Additionally, the strength in the U.S. dollar, which had its best first half in three years, added to the woes (read: U.S. Dollar ETF Hits New 52-Week High).
In particular, faster-than-expected rate hike speculation in the United States, escalating trade war tensions and a strong dollar led to bloodbath in the emerging market equities. MSCI’s widely-tracked emerging market equities index was down almost 8% in the first half. China, touted to be the world's growth engine, slipped into a bear market (down 20% from the last peak). Argentina and Turkey primarily dented investors’ portfolio as their currencies have fallen 30% and 17%, respectively, against the US dollar.
Trump’s anti-trade policies and the resultant escalation in a tit-for-tat tariff exchange as well as Fed rates hike will continue to affect global stocks in the months ahead (read: Trade, Fed & Oil Wrote Top ETF Stories of 1H).
However, a few countries have been spared in the global massacre and will likely maintain their strength. Below, we have highlighted three top-performing country ETFs that delivered near to double-digit returns in the first half. Any of these could be excellent plays for investors seeking to ride out the current market trend:
iShares MSCI Saudi Arabia Capped ETF (KSA - Free Report)
This fund offers exposure to the Saudi Arabian stock market, which has historically been closed to foreign investors. The entry of Saudi Arabia into the emerging market index by MSCI index provider starting in Jun 2019 led to the massive flow of billions of dollars into Middle East’s biggest economy. Per UBS Global Wealth Management, Saudi Arabia’s emerging market status will attract “significant” capital inflows of $45 billion to the kingdom (read: Can the Top Performing Single Country ETF Continue Its Surge?).
KSA tracks the MSCI Saudi Arabia IMI 25/50 Index and holds 72 stocks in its basket. It is heavily concentrated on the top two firms with a combined 27.1% share while the other securities hold less than 10% of total assets. Further, financials and materials take the top two spots with 40.6% and 33.9% share, respectively, while the other sectors make up for a single-digit allocation each. The fund has amassed $276.7 million in AUM and charges 74 bps in annual fees. It surged 20.9% in the first half of 2018 and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
VanEck Vectors Egypt Index ETF
The fund provides exposure to companies that are domiciled and primarily listed in Egypt or that generate at least 50% of their revenues in that country. The stocks in the Egypt are on the rise given the real signs of economic stability and the floatation of state shares, which has attracted more foreign investors to the Egyptian stock market. Additionally, the election in March did not do any harm to the economy and stocks.
EGPT tracks the MVIS Egypt Index and holds 29 stocks in its basket with none holding more than 9.6% of the assets. It has managed $55.2 million in its asset base and charges 94 bps in annual fees. In terms of sector holdings, about one-fourth of the portfolio is invested in the financial sector, followed by real estate (21.2%), materials (17.5%), and consumer staples (17.3%). The product has gained 9.8% so far this year but has a Zacks ETF Rank #4 (Sell) with a High risk outlook, suggesting some pain in the short term.
This fund invests in among the largest and most liquid Norwegian securities, which are benefiting from higher oil prices and the country’s low level of political risk. Notably, Norway is among the top 10 nations famous for oil exports (read: 4 Country ETFs That Should be Beneficiaries of $70 Oil).
NORW follows the MSCI Norway IMI 25/50 Index and holds 62 stocks in its basket with heavy concentration on top three firms, which collectively account for 40.7% of the assets. It has amassed $178.3 million in its asset base and charges 50 bps in annual fees. Energy is the top sector at 33%, closely followed by financials (22%). The product is up 8.9% and has a Zacks ETF Rank #3 with a Medium risk outlook.
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Best Performing Single-Country ETFs of 1H
Stocks across the globe suffered their worst first half of a year since 2010, wiping out trillions of dollars from the MSCI’s 47-country world index. The iShares MSCI ACWI ETF (ACWI - Free Report) , which targets the global stock market, has lost 0.3% year to date and Vanguard FTSE All-World ex-US ETF (VEU - Free Report) , targeting the international equity market excluding the United States, has shed about 3.9%.
A combination of tariff tantrums, broad tech sell-off, the prospect of end to the cheap money era and cooling growth in many parts of the economy including Europe and Japan led to huge capital outflows from the stocks. Additionally, the strength in the U.S. dollar, which had its best first half in three years, added to the woes (read: U.S. Dollar ETF Hits New 52-Week High).
In particular, faster-than-expected rate hike speculation in the United States, escalating trade war tensions and a strong dollar led to bloodbath in the emerging market equities. MSCI’s widely-tracked emerging market equities index was down almost 8% in the first half. China, touted to be the world's growth engine, slipped into a bear market (down 20% from the last peak). Argentina and Turkey primarily dented investors’ portfolio as their currencies have fallen 30% and 17%, respectively, against the US dollar.
Trump’s anti-trade policies and the resultant escalation in a tit-for-tat tariff exchange as well as Fed rates hike will continue to affect global stocks in the months ahead (read: Trade, Fed & Oil Wrote Top ETF Stories of 1H).
However, a few countries have been spared in the global massacre and will likely maintain their strength. Below, we have highlighted three top-performing country ETFs that delivered near to double-digit returns in the first half. Any of these could be excellent plays for investors seeking to ride out the current market trend:
iShares MSCI Saudi Arabia Capped ETF (KSA - Free Report)
This fund offers exposure to the Saudi Arabian stock market, which has historically been closed to foreign investors. The entry of Saudi Arabia into the emerging market index by MSCI index provider starting in Jun 2019 led to the massive flow of billions of dollars into Middle East’s biggest economy. Per UBS Global Wealth Management, Saudi Arabia’s emerging market status will attract “significant” capital inflows of $45 billion to the kingdom (read: Can the Top Performing Single Country ETF Continue Its Surge?).
KSA tracks the MSCI Saudi Arabia IMI 25/50 Index and holds 72 stocks in its basket. It is heavily concentrated on the top two firms with a combined 27.1% share while the other securities hold less than 10% of total assets. Further, financials and materials take the top two spots with 40.6% and 33.9% share, respectively, while the other sectors make up for a single-digit allocation each. The fund has amassed $276.7 million in AUM and charges 74 bps in annual fees. It surged 20.9% in the first half of 2018 and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
VanEck Vectors Egypt Index ETF
The fund provides exposure to companies that are domiciled and primarily listed in Egypt or that generate at least 50% of their revenues in that country. The stocks in the Egypt are on the rise given the real signs of economic stability and the floatation of state shares, which has attracted more foreign investors to the Egyptian stock market. Additionally, the election in March did not do any harm to the economy and stocks.
EGPT tracks the MVIS Egypt Index and holds 29 stocks in its basket with none holding more than 9.6% of the assets. It has managed $55.2 million in its asset base and charges 94 bps in annual fees. In terms of sector holdings, about one-fourth of the portfolio is invested in the financial sector, followed by real estate (21.2%), materials (17.5%), and consumer staples (17.3%). The product has gained 9.8% so far this year but has a Zacks ETF Rank #4 (Sell) with a High risk outlook, suggesting some pain in the short term.
Global X MSCI Norway ETF (NORW - Free Report)
This fund invests in among the largest and most liquid Norwegian securities, which are benefiting from higher oil prices and the country’s low level of political risk. Notably, Norway is among the top 10 nations famous for oil exports (read: 4 Country ETFs That Should be Beneficiaries of $70 Oil).
NORW follows the MSCI Norway IMI 25/50 Index and holds 62 stocks in its basket with heavy concentration on top three firms, which collectively account for 40.7% of the assets. It has amassed $178.3 million in its asset base and charges 50 bps in annual fees. Energy is the top sector at 33%, closely followed by financials (22%). The product is up 8.9% and has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>