Thursday, May 16, 2013

On May 8th we wrote about Quant’s eye wandering overseas as a potential shift away from the US broad market funds that have dominated the ranks all year.  4 foreign funds made the top 10 that morning and 2 others were close; today we see 3 in the top 10 and another in 11th place.  Only some of them are the same.

Today’s 5th place iShares MSCI Switzerland Index Fund (EWL) has been one of the better ranking foreign funds this year with a few visits to the top 10 since gaining 8th place on February 8th and has mostly kept pace with the US market since then.  It has been ranking better since early April on high 70s Fundamental Scores with low 60s on the Behavioral side which we like to say are better scores than if they appeared on your kids’ report card.

The iShares MSCI Australia Index Fund (EWA) has also been one of the better ranking foreign funds this year getting as high as today’s 6th place a few times since we wrote about it on February 15th.  It also mostly kept pace with the US since then until we wrote about it again on April 15th highlighting the times it ranked well which provides a primer on how Quant reacts to price wiggles.  There was a good trade since that April 15th post but it dropped as low as 58th place on April 22nd and the price peaked on April 30th.  Today’s 82.7 sentiment score suggests it could be ready to wiggle back up.

Ranking above both of those is today’s 4th place iShares MSCI Canada Index Fund (EWC).  It ranked well in our early days last summer but had not seen much to get excited about this year until mid March and then became more durable in the upper ranks in early April.  We highlighted its 3rd place driven by a high 81.5 Fundamental Score on March 20th just before it took a 7% correction.  The market knew something because that Fundamental Score has deteriorated down to a still good 73.4 today even though the price is slightly lower.  Rebounding from its correction has boosted its technical score and helped EWC maintain a mid 60s Behavioral Score.

Almost making the top 10 today is Spain’s EWP in 11th place and trending better but its 5.1 Risk Rating differentiates it from the other three.  Those all share low Risk Ratings below 4 which has brought the average of the top 10 below 4 again.  The models still favor the US but there are a few ideas from a few continents for your international allocation.

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