International stocks have been the real winners this year courtesy of cheap valuations and improving economic growth in many parts of the world. After outperforming in the first half, these stocks continued to outstrip the U.S. equity world since the start of the second half.
This is especially true as Vanguard FTSE All-World ex-US ETF (VEU – Free Report) , targeting the international equity market, has gained about 3% compared with growth of 1.9% for iShares MSCI ACWI ETF (ACWI – Free Report) , which targets the global stock market, including the United States and 0.7% for the SPDR S&P 500 ETF Trust (SPY – Free Report) .
Strong corporate earnings, rise in metal prices, impressive rally in emerging markets, support from central bank across the globe and weak dollar are propelling the stocks higher. The recent chaos in Washington, including word of wars with North Korea, doubts over implementation of Trump’s agenda as well as debt-ceiling fears, added to further strength in the international markets lately.
The lure of international bourses is likely to remain in the coming months given the Trump turmoil and the prospect to end the cheap monetary policy era, especially in Europe. The tightening policy will be in line with the Fed and push the U.S. dollar lower and other currencies higher, making international investing tempting.
Given this, we have highlighted the best-performing international ETFs to start the second half. Any of these strong momentum plays could be a compelling choice for investors, provided the same economic trends persist.
Global X Brazil Consumer ETF (BRAQ – Free Report)
Apart from improving fundamentals, Brazilian stocks are gaining from the latest government step of Eletrobras Privatization that has raised consumer confidence in the state-run firms. As such, BRAQ is leading with gains of nearly 29% since the start of the second half. The fund offers exposure to a basket of 34 stocks that operate within the consumer discretionary and consumer staples sectors in Brazil. It tracks the Solactive Brazil Consumer Index, charging investors 77 bps in annual fees. The product has been able to manage just $6.5 million in its asset base and has a Zacks ETF Rank of #4 (Sell) with a High risk outlook.
KraneShares CSI China Internet Fund (KWEB – Free Report)
This ETF is benefiting from the dual tailwinds of emerging market lead and a surge in technology sector. It provides a concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 35 securities in its basket with heavy concentration on the top three firms. The technology sector makes up for a substantial 60% of total assets, while consumer discretionary takes the remainder with just 2.5% allotted to industrials. The ETF has amassed $799.3 million in its asset base and charges 72 bps in annual fees from investors. KWEB has gained 18.7% so far in the second half of the year and currently has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
