Reviewing the CASSH ETFs
There are no shortage of emerging markets acronyms. However, Russ Koesterich, iShares Global Chief Investment Strategist, coined a memorable acronym for some developed nations: CASSH. This acronym includes Canada, Australia, Singapore, Switzerland and Hong Kong.
CASSH arose as a developed market alternative to U.S., Japan, Eurozone and other bulky developed markets dealing with suffocating debt burdens and stagnant growth.
"Year-to-date, this theme has played out well," Koesterich wrote in a report on the CASSH nations. "On a dollar basis, an equally weighted basket of CASSH countries has returned roughly 11.5% versus a return of approximately 8% for a broad global benchmark and 6.5% percent for developed markets."
Koesterich noted that part of the reason for the outperformance by CASSH is stronger fundamentals. Specifically, he said CASSH countries have "lower debt, deficits and unemployment."
Here is an update on how CAASH ETFs have been performing over the past several months.
iShares MSCI Canada Index Fund (NYSE: EWC) As Koesterich notes in his report, the CASSH group has a reputation as a commodities play. Part of that reputation stems from Canada. To that end, sagging oil prices have weighed on the iShares MSCI Canada Index Fund over the past three months. EWC has fallen about one percent over this period even as the SPDR S&P 500 (NYSE: SPY) has jumped 2.6 percent.
Energy and materials names account for more than 45 percent of the fund's weight, but financials are the largest single-sector allocation at 33.5 percent. EWC has turned things around in the past month and rallied about 3.8 percent to perform roughly in-line with SPY.
iShares MSCI Australia Index Fund (NYSE: EWA) CASSH's commodity reputation is extended by Australia. The retreat from the risk-on trade hampered the iShares MSCI Australia Index Fund earlier this year. That is to be expected when an ETF devotes more than 22 percent of its weight to materials equities. BHP Billiton (NYSE: BHP), the world's largest mining company, is EWA''s top holding.
EWA rose moderately over the past 90 days, gaining 2.7 percent. As risk appetite has crept back into the market over the past month, EWA has surged 8.5 percent. In addition, EWA has a trailing 12-month yield of about 4.7 percent.
iShares MSCI Singapore Index Fund (NYSE: EWS) Singapore is a developed market in a region largely populated with developing nations. Moreover, the city-state boasts a AAA credit rating.
Another feather in Singapore's cap: it may now be the financial capital of Asia. That much is reflected in the iShares MSCI Singapore Index Fund's nearly 48 percent allocation to financial services stocks.
EWS has performed solidly over the past three months, but in the past month the ETF has climbed almost seven percent. EWS yields 3.64 percent and represents a conservative way for investors to gain exposure to the rapidly growing ASEAN region.
iShares MSCI Switzerland Index Fund (NYSE: EWL) By now, many investors know a primary advantage to investing in Switzerland instead of other European nations is that the country is not a Eurozone member. Still, proximity to the debt-laden euro area can make investors skittish, which might explain why the iShares MSCI Switzerland Index Fund is in the red over the past three months.
EWL's dividend yield is around 2.7 percent, and the ETF can be an outlet for conservative investors looking for international exposure. Health care and consumer staples names combine for over 56 percent of EWL's weight.
iShares MSCI Hong Kong Index Fund (NYSE: EWH) Hong Kong is often viewed as a play on China, but that correlation is quite loose in the ETF universe. Year-to-date, the iShares MSCI Hong Kong Index Fund has gained 11.4 percent compared to a gain of just 1.2 percent for the iShares FTSE China 25 Index Fund (NYSE: FXI). Like Singapore, Hong Kong is viewed as an Asian financial hub, so investors get a de facto bank ETF with EWH as financials represent 62 percent of the fund's weight.
EWH's chart is strong with support firm at $16.50. Should the broader market continue rallying, EWH may soon join the new 52-week high club.
For more on CASSH, click here.
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