Market Overview

Five Unheralded Developed Market ETFs To Consider


Emerging markets ETFs have been moving in fits and starts this year and while a sequel to last year's strong performance for the asset class isn't off the table, it is clear that developed markets have been far more dependable this year.

That's good news for risk-averse investors, but buying an ETF that tracks a developed should mean much more than plunking some cash down on the SPDR S&P 500 (NYSE: SPY) and just letting it sit there. Options are abound in the developed market ETF universe are more exciting and potentially more profitable than a simple index fund tracking U.S. stocks.

Let's examine some developed market ETFs that may be worth considering.

1) SPDR S&P International Dividend ETF (NYSE: DWX): DWX isn't a pure developed markets play as 10 countries with the emerging markets designation are included in this ETF, but their combined weight is scant. DWX is comparable to many dividend ETFs that track U.S. stocks in that telecom and utilities figure prominently in the ETF's mix. There is no getting around DWX's 35.5% surge in the past year and an almost $4 drop this month could be a buying opportunity.

The knocks on DWX are intertwined. A 24% weight to financials and members of the European Union account for over 50% of the ETF's country allocations.

2) Market Vectors Germany Small-Cap ETF (NYSE: GERJ): Now about six weeks old, GERJ has done an admirable job of attracting investor interest, accumulating $2.5 million in assets under management. Germany has been the EU's most dependable and resilient economies and was the fastest-growing G-7 member last year. If the small-cap theme is reborn, GERJ's exposure to an export-driven economy could put the ETF in position to be one of 2011's better rookie ETFs.

3) iShares MSCI Netherlands Investable Market Index Fund (NYSE: EWN): The Netherlands doesn't offer the size or the growth of Germany, but hey, it's not Portugal or Greece, either. This is basically a pretty sleepy economy marked by highly productive workers and dependable, incremental growth. EWN is kind of the anti-emerging markets ETF, but if it bounces off support $22, a quick $2 can be had on a run back to $24. If that resistance breaks, another 10% could be in the cards.

4) iShares MSCI New Zealand Investable Market Index Fund (NYSE: ENZL): Just eight months old, ENZL got off to a slow start, but has since accumulated almost $98 million in AUM. While New Zealand is a developed market, it is also viewed as a commodities trade, so the ETF is probably down over the past few weeks, right? Wrong. This fund has surged almost 20% in the past two months and has done so in straight-line, parabolic fashion giving the ETF a chart that looks almost like silver's, you know, pre-margin hike carnage.

5) Global X FTSE Nordic Region ETF (NYSE: GXF): We recently extolled the virtues of GXF as a way for the indecisive investor to developed market non-U.S. exposure without messing with the EU. Sweden accounts for almost 47% of GXF's weight, which is a good thing, but the ETF is also worth a look for what it does NOT feature. Translation: Problem child Nokia (NYSE: NOK) gets a weight of just 4.7% here and Iceland is not represented at all.

Posted-In: Long Ideas News Sector ETFs Short Ideas Dividends Dividends Specialty ETFs New ETFs Best of Benzinga


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