Friday, February 15, 2013

G20 finance ministers are meeting in Russia and the Americans are warning against loose talk regarding weaker currencies.  We remember how the last Administration’s weak dollar policy ended with a meteor hitting the world economy and as a warning to those folks today, a meteor streaked across the Russian sky shattering windows and sending broken glass down to the streets below.  As the investing world becomes enamored with Shinzō Abe’s weak Yen policy Quant isn’t taking the bait, no Japan funds show up anywhere near the upper ranks lately.  However, two foreign funds are breaking the US hold on the top ten and both are notable for their strong currencies.

Today’s 5th place iShares MSCI Australia Index Fund (EWA) represents a country with a dollar that trades at a premium to our Bernanke dollar.  That has been enough for some sovereign wealth funds to redirect investments there pushing EWA ahead of the S&P500’s stellar performance.  A very nice 75.1 technical score is exceeded by an even better 83.3 sentiment score as the market is conditioned to spurn strong currencies, 2008 notwithstanding.  EWA’s impressive rally hasn’t damaged its valuation too much as it still gets a decent 71 Fundamental Score.

Another foreign fund from a country with a strong currency is the iShares MSCI Switzerland Index Fund (EWL).  It has been ranking near the top for most of this year and its performance has justified today’s 7th place rank.  That rally hasn’t been fueled by the weakening Euro as they use the appreciating Swiss Franc (which also trades at a premium to Bernanke’s dollar).  The Swiss National Bank has capped that appreciation against the Euro in response to complaining Swiss exporters but if you put your investments there currency risk shouldn’t be foremost on your mind.  EWA’s 68.6 sentiment score suggests some market skepticism but it falls in the middle of its recent range.  Its 73.7 technical score suggests the rally in the Swiss market has further to go and it’s even better 79 Fundamental Score says this one is still cheap.

If a weak currency was the path to national greatness, George W. Bush would be king of the world.  We all remember how that weak dollar policy ended and while Quant does not say whether another meteor is headed towards our markets, we continue to see the low risk theme dominate.  Coming from countries with strong currencies, EWA and EWL are also notable for the low 2 handles on their Red Diamond Risk Ratings.  That keeps the average of the upper ranks below 4 but that low risk hasn’t impacted performance as those have been the strongest areas to be in.  Nobody but ETF Globalsm shows you those funds with low risk and high reward prospects and our updated performance pages attest to our effectiveness.  We’re glad you are among those who realize the value we add.  Please help us spread the word and have a nice weekend.

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