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The first quarter of 2019 has been upbeat for international markets mainly due to dovish central banks in most developed economies and cues of abatement in US-China trade tensions. Otherwise, international growth has been pretty dull. All that were prominent in the quarter were weakness in the Eurozone and China, persistent Brexit crisis and renewed selloff in Turkish lira.
Eurozone GDP released for fourth-quarter 2018 was near a four-year low. In its March meeting, the European Central Bank (ECB) hinted at moderation in economic growth and the need to keep policies accommodative. The ECB postponed the timeframe for an interest rate hike, cut GDP growth outlook for 2019 and 2020 and restarted a stimulus program of cheap loans to bolster the struggling economy (read: ECB Surprisingly Dovish: Play Currency-Hedged Euro Zone ETFs).
Australia’s Q4 GDP growth rate slipped to a two-year low. In the fourth quarter of 2018, New Zealand recorded the weakest annual GDP growth rate since Q4 of 2013. The Chinese economy also slowed, but stimulus and a wide range of reformative measures taken by the government have raised the appeal of China stocks (read: Will the Year of Pig Shower Fortunes on China ETFs?).
Brexit crisis continued. Members of the British Parliament have already turned down eight different proposals on Britain's withdrawal from the European Union (EU) amid the nearing of the Mar 29 deadline. If prime minister Theresa May’s deal fails, the scenario gets more complex. Notably, Apr 12 is the final date for the U.K. to reach a conclusion whether to take part in elections for the European Parliament, scheduled May 23-26.
All in all, growth worries and the resultant easy economic policies gave a boost to international equities. iShares MSCI EAFE ETF (EFA - Free Report) has added 10.6% in the past three months (as of Mar 28, 2019), iShares MSCI Emerging Markets ETF (EEM - Free Report) has added about 9.3%, iShares MSCI ACWI ETF (ACWI - Free Report) has jumped 12.5% during this timeframe, iShares Asia 50 ETFAIA) has added 10%, iShares Currency Hedged MSCI Eurozone ETF (HEZU - Free Report) has advanced 13.2% and Vanguard FTSE Europe Index Fund ETF Shares (VGK - Free Report) has tacked on 11.9% gains. U.S. markets were a bit sturdier than foreign markets as the S&P 500 ETF (SPY - Free Report) has added about 13.7% (read: Top ETF Stories of Q1).
Best- PerformingETFs in Focus
Against this backdrop, we highlight a few international ETFs that have been the top performers.
First Trust Dow Jones International Internet ETF (FDNI - Free Report) — Up 18.9%
Tech stocks recovered in the quarter from the December slump. The underlying Dow Jones International Internet Index is a float-adjusted market capitalization weighted index designed to measure the performance of the 40 largest and most actively traded non-U.S. international companies in the Internet industry that are engaged in Internet commerce and Internet services. The fund charges 65 bps in fees.
Davis Select International ETF (DINT - Free Report) — Up 17.1%
This is an actively-managed ETF, which charges 75 bps in fees. At the current level, China, Switzerland and France get the top-most exposure while Consumer Discretionary (33.5%), Financials (25.4%) and Industrials (21.0%) are the top-three sectors of the fund.
WisdomTree Global ex-US Real Estate Fund — Up 15%
Easy money policies and low rates are great for real estate investing. The fund’s underlying index measures the performance of companies from developed and emerging markets outside of the United States. Hong Kong (26.56%) and Australia (10.69%) are the top geographies of the fund. The fund charges 58 bps in fees and yields 3.94% annually.
WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Fund (DHDG - Free Report) — Up 15.9%
What could a better pick than a quality dividend ETF when growth concerns are this rife?
The fund tracks the investment results of developed market companies, barring the U.S. and Canada, with growth and quality characteristics while at the same time hedging exposure to fluctuations between the value of foreign currencies relative to the U.S. dollar. United Kingdom (21.3%), Japan (16.3%) and Denmark (10.5%) take the top three spots. Industrials, Consumer Discretionary, Health Care, Consumer Staples and Information Technology hold double-digit weight.
Equbot AI Powered International Equity ETF – Up 15.7%
This is an active ETF. It invests primarily in equity securities of companies in developed markets outside the United States. The 150-stock fund charges 79 bps in fees and yields 3.15% annually.
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5 Top-Performing International ETFs of Q1
The first quarter of 2019 has been upbeat for international markets mainly due to dovish central banks in most developed economies and cues of abatement in US-China trade tensions. Otherwise, international growth has been pretty dull. All that were prominent in the quarter were weakness in the Eurozone and China, persistent Brexit crisis and renewed selloff in Turkish lira.
Eurozone GDP released for fourth-quarter 2018 was near a four-year low. In its March meeting, the European Central Bank (ECB) hinted at moderation in economic growth and the need to keep policies accommodative. The ECB postponed the timeframe for an interest rate hike, cut GDP growth outlook for 2019 and 2020 and restarted a stimulus program of cheap loans to bolster the struggling economy (read: ECB Surprisingly Dovish: Play Currency-Hedged Euro Zone ETFs).
Australia’s Q4 GDP growth rate slipped to a two-year low. In the fourth quarter of 2018, New Zealand recorded the weakest annual GDP growth rate since Q4 of 2013. The Chinese economy also slowed, but stimulus and a wide range of reformative measures taken by the government have raised the appeal of China stocks (read: Will the Year of Pig Shower Fortunes on China ETFs?).
Brexit crisis continued. Members of the British Parliament have already turned down eight different proposals on Britain's withdrawal from the European Union (EU) amid the nearing of the Mar 29 deadline. If prime minister Theresa May’s deal fails, the scenario gets more complex. Notably, Apr 12 is the final date for the U.K. to reach a conclusion whether to take part in elections for the European Parliament, scheduled May 23-26.
All in all, growth worries and the resultant easy economic policies gave a boost to international equities. iShares MSCI EAFE ETF (EFA - Free Report) has added 10.6% in the past three months (as of Mar 28, 2019), iShares MSCI Emerging Markets ETF (EEM - Free Report) has added about 9.3%, iShares MSCI ACWI ETF (ACWI - Free Report) has jumped 12.5% during this timeframe, iShares Asia 50 ETF AIA) has added 10%, iShares Currency Hedged MSCI Eurozone ETF (HEZU - Free Report) has advanced 13.2% and Vanguard FTSE Europe Index Fund ETF Shares (VGK - Free Report) has tacked on 11.9% gains. U.S. markets were a bit sturdier than foreign markets as the S&P 500 ETF (SPY - Free Report) has added about 13.7% (read: Top ETF Stories of Q1).
Best- PerformingETFs in Focus
Against this backdrop, we highlight a few international ETFs that have been the top performers.
First Trust Dow Jones International Internet ETF (FDNI - Free Report) — Up 18.9%
Tech stocks recovered in the quarter from the December slump. The underlying Dow Jones International Internet Index is a float-adjusted market capitalization weighted index designed to measure the performance of the 40 largest and most actively traded non-U.S. international companies in the Internet industry that are engaged in Internet commerce and Internet services. The fund charges 65 bps in fees.
Davis Select International ETF (DINT - Free Report) — Up 17.1%
This is an actively-managed ETF, which charges 75 bps in fees. At the current level, China, Switzerland and France get the top-most exposure while Consumer Discretionary (33.5%), Financials (25.4%) and Industrials (21.0%) are the top-three sectors of the fund.
WisdomTree Global ex-US Real Estate Fund — Up 15%
Easy money policies and low rates are great for real estate investing. The fund’s underlying index measures the performance of companies from developed and emerging markets outside of the United States. Hong Kong (26.56%) and Australia (10.69%) are the top geographies of the fund. The fund charges 58 bps in fees and yields 3.94% annually.
WisdomTree Dynamic Currency Hedged International Quality Dividend Growth Fund (DHDG - Free Report) — Up 15.9%
What could a better pick than a quality dividend ETF when growth concerns are this rife?
The fund tracks the investment results of developed market companies, barring the U.S. and Canada, with growth and quality characteristics while at the same time hedging exposure to fluctuations between the value of foreign currencies relative to the U.S. dollar. United Kingdom (21.3%), Japan (16.3%) and Denmark (10.5%) take the top three spots. Industrials, Consumer Discretionary, Health Care, Consumer Staples and Information Technology hold double-digit weight.
Equbot AI Powered International Equity ETF – Up 15.7%
This is an active ETF. It invests primarily in equity securities of companies in developed markets outside the United States. The 150-stock fund charges 79 bps in fees and yields 3.15% annually.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>