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Posted by on Nov 6, 2014 in Laif Meidell

Foreign investments underperforming U.S.

Foreign investments underperforming U.S.

By Laif Meidell, CMT, president of American Wealth Management, and portfolio manager of the AdvisorShares Meidell Tactical Advantage ETF (MATH)

Of the roughly 50 different countries or regions that we follow on a weekly basis, only one has outperformed the Standard & Poor 500’s gain of 4.64 percent over the past three months, and that is the Indus India index, with an increase of 4.95 percent over the same period. The point being that most foreign investments have generally underperformed the U.S., while acting as a drag on the returns of a more diversified portfolio over the past three to five months.

Generally speaking, foreign investments began underperforming in late June as a result of deteriorating economic reports from around the globe in addition to a strengthening U.S. dollar beginning in July of this year. For the week, India is near the top of our weekly performance list, with the Indus India index higher by 2.79 percent over the past five trading days, outperforming the S&P 500’s 2.08 percent gain over the same period

Digging into the details, on Monday, the HSBC PMI Manufacturing index rose to 51.6 in October, up from 51 in September. Readings above 50 show an expansion, so this month’s numbers indicate a slight acceleration in the manufacturing sector. Businesses in India reported receiving more orders from overseas clients, with foreign orders growing at the strongest pace in four months.

Our top-performing country for the week is Egypt, with the Market Vectors Egypt index gaining 6.32 percent over the past five trading days.

Unlike many foreign countries, Egypt has closed back above its longer-term trend line, which is generally bullish.

However, Egypt has had its share of problems, from political instability, to failed economic and budget overhauls, to war within its neighboring countries such as Libya. However, Egypt has one important asset at this point, and that is the perception by some world leaders that it’s the one country in the region that is too important to fail.

This means organizations such as the International Monetary Fund and countries like the U.S. are more likely to step in and provide the financial support needed to help Egypt through this difficult time.

In this case, Egypt’s strength is not itself but those who have an interest in its success.

This commentary originally published in the Reno Gazette-Journal. Performance numbers used in this article were obtained through eSignal and are not guaranteed to be accurate.

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.