Published:
February 11, 2008
As the U.S. market has
suffered a sharp correction in recent months, many financial
pundits have been recommending that investors protect their
assets by stashing them overseas. Unfortunately, while this strategy sounds great in theory, it
usually doesn't work out too well when put into practice.
In today's global economy, if the U.S. sneezes, international
markets are usually quick to catch a cold. For example, after
the Dow Jones Industrials tumbled nearly 700 points from January
14-18, foreign exchanges quickly followed suit -- plunging the
following Monday.
Tokyo's Nikkei 225 Index retreated -4% on the day, major
benchmarks in London and Paris registered declines of around -6%,
Germany's blue-chip DAX 30 shed -7%, and India's SENSEX was down
as much as -11% at one point. That frenzied sell-off dashed hopes
that stocks in faster-growing nations in Europe and Asia might
become decoupled from those in the U.S.
However, there is one group that doesn't always march to the
beat of the U.S. drum -- foreign small-caps.
SPDR S&P International Small
Cap (AMEX: GWX, $30.38) offers exposure to a broad basket of 500 small and
mid-size stocks culled from markets all over the world. Japan
soaks up most of the portfolio's assets (30%), followed by the
U.K. (12%), Canada (11%), Australia (9%), and Korea (5%).
However, this is a far-reaching international fund, with a stake
in countries ranging from Italy to Luxembourg.
Those looking for a fund that truly offers some diversification
against U.S. volatility will find it here -- with a low beta of
just 0.32. But diversification isn't all you'll get. As of last
September, the fund's index had posted impressive 5-year
annualized gains of +30.0%, trouncing both the S&P 500 and the
Russell 2000.
Of course, I don't mean to imply that the fund will emerge from
a global economic slowdown unscathed, or that shareholders should
grow accustomed to the sizzling gains of recent years. However,
long-term shareholders looking to cash in on the growth of
up-and-coming companies from around the world should be pleased.
Nathan Slaughter
Editor
The ETF Authority
About
The ETF Authority
The mission of The ETF Authority
is to help our readers identify today's most profitable ETFs and closed-end
funds. (Learn
More)
About Nathan Slaughter
Nathan Slaughter has developed a long and successful track
record over the years by investing in both exchange-traded funds (ETFs) and
deeply discounted value securities. When it comes to ETFs, Nathan has
created a proprietary ranking system that helps him zero in on today's most
promising funds.
Nathan's previous experience includes a long tenure at
AXA/Equitable Advisors, where he provided comprehensive investment advisory
services to small businesses and high net-worth clients. He also honed his
research skills at Morgan Keegan, where he performed asset allocation,
retirement planning, and consultative portfolio management services.
Several years ago Nathan switched gears and decided to devote
his time exclusively to financial analysis and writing. He has since published
hundreds of articles for a variety of prominent online and print publications,
and he now writes exclusively for StreetAuthority.com.
Nathan's educational background includes NASD series 6, 7, 63,
& 65 certifications, as well as a degree in Finance/Investment Management.
He currently resides in Shreveport, LA with wife Julie and sons Aidan and Riley.
To learn more about Nathan Slaughter's premium investing newsletter -- The
ETF Authority -- please
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