Global stock markets are on track to record their best first-half performance in more than 20 years. This performance has been primarily driven by central banks across the world that are once again moving to easy money policies with some signaling interest rate cut and some launching fresh stimulus to tackle global growth headwinds.
The Federal Reserve in its latest meeting showed its readiness to cut interest rates if needed while European Central Bank (ECB) also kept interest rates on hold at record-low levels until at least the second half of 2020. Meanwhile, the Bank of Japan also pleadged to maintain the current low rates “at least until the spring of 2020” (read: ECB Considers Further Stimulus: ETFs to Top & Flop).
Australia’s central bank recently slashed benchmark rates to a record low of 1.25%. Last month, New Zealand’s central bank cut its benchmark interest rate for the first time in two-and-a-half years. India also cut interest rates for the third time. Many other countries like Indonesia, Korea, Russia, South Africa, Turkey and Brazil are also expected to cut rates in the coming months.
Stocks also have been witnessing an upside driven by hopes of resumption of trade talks between the United States and China this week. However, still unresolved trade issues, Brexit uncertainty, rising Middle East tension, geopolitical tension and global growth slowdown weighed on the stocks (read: Go for Safe-Haven ETFs Amid Rising Geopolitical Risks).
While there have been winners in many corners of the world, we highlight four top-performing country ETFs that are up more than 30%. Any of these could be excellent plays for investors seeking to ride out the current market concerns:
iShares MSCI Argentina and Global Exposure ETF (LON:AGT)
After being badly hit by another financial crisis in 2018, Argentina’s stock market rebounded this year. Argentina's central bank’s move to introduce a tighter monetary policy late last year to curtail the peso's slide and curb inflation has started to pay off. Additionally, latest data suggests that the deficits in the country are declining. As a result, AGT has gained 37.2% so far this year. The fund tracks the MSCI All Argentina 25/50 Index, holding 26 stocks in its basket with heavy concentration on the top two firms. It has managed $26.1 million in its asset base and trades in average daily trading volume of nearly 6,000 shares. It charges 59 bps in fees and expenses and has a Zacks ETF Rank #3 (Hold).
Global X MSCI Greece ETF GREK
Greece stock market has been on a tear on resurgent economy and the ongoing push to offload bad debt on banks’ balance sheets, which have weighed on the country’s recovery for years. The once downtrodden Mediterranean economy is also on track to record the fastest growth since 2007 backed by recovery in consumer confidence to almost pre-crisis levels. Additionally, a big defeat of the ruling leftist coalition in regional and Euro elections has also added to the strength (read: International ETFs Win in May).
As a result, GREK, which tracks the MSCI All Greece Select 25/50 Index, has climbed 36.8% in the first half. It is home to a small basket of 35 companies with heavy concentration on the top three firms. Financials takes the top spot at 22% in terms of sector holdings, followed by energy (20.6%), consumer discretionary (17%), and communication services (14.2%). The product has amassed $334 million in its asset base and trades in solid volume of around 402,000 shares per day. It charges 59 bps in fees per year from investors but has a Zacks ETF Rank #4 (Sell) with a High risk outlook.
CSOP FTSE China A50 ETF AFTY
Despite the slowing economy and trade tariffs, Chinese stocks are actually performing well this year with AFTY leading the way. It has gained 33.4% so far this year. The ETF follows the FTSE China A50 Net Total Return Index, which comprises A-Shares issued by the 50 largest companies in the China A-Shares market. More than half of the portfolio is dominated by financials while consumer staples rounds off the next spot with double-digit exposure. The ETF has accumulated $11.4 million in its asset base while trading in average daily volume of 10,000 shares. It charges 70 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: China Disappoints With Sluggish Numbers: 5 ETFs in Focus).
Franklin FTSE Russia ETF FLRU
Russia ETF has been the second best emerging market ETF on hopes of a rate cut by the country’s central bank. The Bank of Russia, in its latest meeting, cut its benchmark one-week repo rate by 25 bps and signaled additional rate cuts in the coming months, given slower inflation and weaker-than-expected economic growth. The rate cuts will allow more cheap money flows into the economy, thereby boosting the Russian stock market. While all Russia ETFs performed better, FLRU is the real winner, gaining 32.2% in the first half.
This fund provides targeted exposure to large- and mid-sized companies in Russia by tracking the FTSE Russia Capped Index. Holding 32 stocks in its basket, the fund is heavily weighted toward the top three firms at 16% share each. From a sector look, energy takes the top spot at 50% while financials and materials round off the next two with double-digit exposure each. FLRU is often overlooked with AUM of just $14.9 million and average daily volume of 1,000 shares. It charges 19 bps in annual fees and has a Zacks ETF Rank #3.
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