Cashing In With CASSH? (EWL, EWS, EWH)
There are plenty of emerging markets acronyms so how about one for the developed world? iShares' Russ Koesterich coined a catchy one with CASSH. That is Canada, Australia, Singapore, Switzerland and Hong Kong.
That's a group of developed markets that offer better growth prospects than Europe, Japan or the U.S. Koesterich predicts 3.5% growth for the CASSH crew this year and that's a lot better than the 2.2% growth the U.S. is expected to show or the anemic 1% forecast for the European Union.
Other perks of the CASSH group include tolerable debt burdens and excellent credit ratings. With that, let's do what we did with CIVETS and rank our preferred ETF options for cashing in on CASSH for the rest of 2012.
iShares MSCI Singapore Index Fund (NYSE: EWS) We really could have gone either way with the top spot, Singapore or Hong Kong, but even though EWS has been a stellar performer to start 2012, there might be more upside with this ETF than with the rival Hong Kong option. EWS could be a potential breakout candidate as well if resistance at $13 falls.
Overall, there's a lot to like with Singapore, namely a high per capita GDP and proximity to plenty of emerging markets. Also consider the new iShares MSCI Singapore Small Cap Index Fund (NYSE: EWSS).
iShares MSCI Hong Kong Index Fund (NYSE: EWH) One of the selling points of the iShares MSCI Hong Kong Index Fund is that it's a more conservative way of getting China exposure. That might be interpreted to mean the ETF's returns will lag those of China-specific funds. Well, in 2012, EWH has outperformed the iShares FTSE China 25 Index Fund (NYSE: FXI). Just be advised with EWH that you're getting an ETF that is over 61% allocated to financial services stocks.
IndexIQ Australia Small Cap ETF (NYSE: KROO) Sure, the iShares MSCI Australia Index Fund (NYSE: EWA) could go in this spot, but KROO offers more access to the primary reason many investors want Australian exposure in the first place: Commodities. KROO is up 20% year-to-date and the ETF is home to a strong chart, but those aren't the only bullish traits. Quiet as it is kept, KROO currently yields almost 7.5%. That's a pleasant surprise indeed. Not to mention, KROO has left EWA in the dust this year.
IndexIQ Canada Small Cap ETF (NYSE: CNDA) Like KROO, CNDA has a few large-cap rivals, one courtesy of iShares in the form of the iShares MSCI Canada Index Fund (NYSE: EWC). And like KROO, CNDA is the small-cap play on a developed market that is deeply tied to the commodities trade.
And like KROO, CNDA has easily outpaced its iShares rival this year. CNDA's place on this list should not be interpreted as a knock on the ETF, but rather some concern that if the U.S. equity markets and the economy here take a sudden turn for the worse, that Canada would suffer in tandem.
iShares MSCI Switzerland Index Fund (NYSE: EWL) The other "S" in CASSH has been fine this year as EWL is up almost 9% year-to-date. Problem is the S&P 500 is up a little more than that as is the Vanguard MSCI Europe ETF (NYSE: VGK). EWL coming in last on this list has more to do with currency issues than anything else. Guess who has been creeping higher lately? The CurrencyShares Swiss Franc Trust (NYSE: FXF).
A strong currency is not good for export-dependent Switzerland, especially when many of the country's exports go to already financially imperiled countries. The potential for lowered rates of export with unfavorable currency terms is why we placed EWL in this spot.
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