Big Performers in Global-Market ETFs

 | Nov 01, 2012 | 8:30 AM EDT
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Earlier this week, I did a roundup of some emerging-market ETFs, comparing their pros and cons.

While some of those have notched hefty year-to-date gains, there are some even better performers hailing from the ranks of global-market ETFs.

Be aware: Even for those who use tactical allocation, there is inherent risk with country-specific funds. It's too easy for bad news to suddenly slam a particular country. A dramatic example can be seen in the iShares MSCI Japan Index Fund's (EWJ) gap lower in March 2011, after the earthquake and nuclear crisis. For the month, the fund was down 10.5%.

Granted, that's a somewhat obvious example, but it illustrates the risks inherent with allocating too much into a specific country. Even in developed nations, news can send stocks sharply lower.

While the markets were closed, I ran some scans of country-specific ETFs showing the best price appreciation.

The iShares MSCI Germany Index Fund (EWG) is up 18.63% year-to-date, closing Friday at $22.80. The fund's expense ratio is 0.51%, less than many from the emerging-market category. Its dividend yield is 2.6%.

Top holdings include the Germany-traded shares of Siemens, BASF, Bayer, SAP, Allianz, Daimler, Deutsche Bank and Deutsche Telekom.

Technically, the stock is forming a handle formation above its 10-week moving average. That's potentially bullish chart action, but, as with individual stocks, use extra caution in a market downturn.

The iShares MSCI Hong Kong Index Fund (EWH), which has been in rally mode since June, climbed to a 52-week high of $18.92 last week. The fund has about $2.6 billion in assets under management and an expense ratio of 0.52%.

Unlike the Germany fund, the roster of top holdings in the EWH contains few names that are familiar to Americans. The top holding, however, is AIA Group. If that has a familiar ring, it's because it is the Asian unit of insurer AIG (AIG) that was spun off as a separate company in 2009. It constitutes about 12% of the fund.

Other top holdings are: Sun Hung Kai Properties, Cheung Kong Holdings, Hutchison Whampoa and Hong Kong Exchanges & Clearing.

It's not just developed nation funds that are leading the pack. The iShares MSCI Mexico Investable Market Index Fund (EWW) is up 22.41% year to date. It closed Friday at $66.47, and was trading lower early in Wednesday's session.

Here, as you might guess, there are some familiar names. The fund includes the Mexico-listed shares of several companies that also have ADRs in the U.S. Those include America Movil (AMX), Fomento Economico Mexicano (FMX), Cemex (CX) and Grupo Televisa (TV). The Mexico-listed unit of Wal-Mart (WMT) is also a top holding.

The fund has nearly $1.5 billion under management. Its expense ratio is 0.52%.

For the month, the ETF was showing a gain of around 0.6%, about 90 minutes into Friday's session. It was trading at the bottom of its monthly range, but if the gains hold, October will mark the fifth month out of the past six that the fund will finish higher.

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