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How Global Exchange-Traded Funds Compare to Domestic ETFs

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global up positive chart

I want to take a little trip around the world this week by looking at a few key charts of exchange-traded funds (ETFs) pegged to various regions of the globe. Let’s start with the action in Europe via the iShares Europe 350 (IEV).

For most of the past year, stocks in Europe have trended steadily higher. The sector had a rough start to 2014 with a late-January sell-off. But since February, we’ve seen a concerted move higher in European stocks. Part of this move higher is due to the confidence that the European Central Bank will come in with its own version of quantitative easing if the economy in the European Union (EU) starts to falter.


Here in the United States, we’ve seen strength in the large-cap segment of the market, including in major indices such as the Dow Jones Industrial Average and the S&P 500. Those respective indices are trading near their all-time highs, but not all segments of the market have followed suit.

Stocks that make up the small-cap segment of the U.S. market, such as those in the iShares Russell 2000 (IWM), have taken a decided turn lower since April and plunged below both the 50- and 200-day moving averages during the past six weeks. The weakness in small-caps is worrisome for the bulls, as it could be the first real sign of a wider sell-off to come for the entire U.S. market.


The real bullish action of late in stocks has come from the emerging markets. The chart here of the iShares MSCI Emerging Markets (EEM) clearly shows the decided uptrend in the sector since mid-March. The buying in EEM has pushed the fund above the 50- and 200-day moving averages, a very bullish sign going forward. Perhaps even more of a bullish signal for the sector is the crossing of the 50-day average above the 200-day, a condition known as a “golden cross.”


One sub-segment of the emerging markets that’s really seen some heavy buying of late is India. Stocks in the sector, as represented by the WisdomTree India Earnings Fund (EPI), have vaulted to multi-year highs. The catalyst here was last week’s election of the pro-business Bharatiya Janata Party, or BJP, and particularly the election of BJP Party leader Narendra Modi as the new prime minister.


The surge higher in emerging markets in general, and specifically in India, reflects two trends that we are currently taking advantage of in the Successful ETF Investing newsletter advisory service. The way we see it, given the modest gains in the United States and Europe this year, and the relatively big gains in emerging markets of late, you need to have at least some exposure to these sectors right now.

So, how much of your portfolio is positioned in emerging markets? If the answer is little or none, then now is the time to start thinking about a little portfolio rotation.

Twain on Patriotism

“Patriotism is supporting your country all the time, and your government when it deserves it.”

–Mark Twain

Unquestionably one of America’s most brilliant writers, Mark Twain also had some keen insights into the nature of government. Here he puts the issue of patriotism, country and government in wise perspective. I think we all should remember his words, particularly this Memorial Day weekend.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my article from on last week about what the rise of emerging markets means for their future. I also invite you to comment in the space provided below.

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About Doug Fabian

Doug Fabian is the editor of the monthly investment newsletter Successful ETF Investing, and is the host of the syndicated radio show "Doug Fabian's Wealth Strategies." He also recently began writing the weekly trading service ETF Trader’s Edge. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug published the book "Maverick Investing," and has appeared as a commentator on CNBC, Fox News, and CNN. He also has been quoted in the Wall Street Journal, USA Today, Barron's, and other publications. For more information about Doug’s services, go to http://www.fabian.com/

View all posts by Doug Fabian →


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