Be Like Byron Wien With These ETFs
Blackstone (NYSE: BX) Vice Chairman Byron Wien published is always highly anticipated list of yearly surprises on Wednesday, a tradition Wien started in 1986 when he was the Chief U.S. Investment Strategist at Morgan Stanley (NYSE: MS).
Some of the predictions, such as the calls that Iran will proceed with uranium enrichment and that “Republicans make a major effort to become leaders in immigration policy,” are broad in stroke and do not represent investable ideas. Some of Wien’s other predictions can be easily played by investors with ETFs representing perhaps the best way of doing so. Here are a few examples.
Market Vectors China ETF (NYSE: PEK)
With no shortage of China ETFs tracking familiar U.S.-listed Chinese large-caps, the Market Vectors China ETF often gets overlooked. However, investors will want to give PEK serious consideration if Wien’s prediction regarding China comes to fruition.
“The new leaders in China seem determined to implement reforms to root out corruption, to keep the economy growing at 7% or better and to begin to develop improved health care and retirement programs. The Shanghai Composite finally comes alive and the “A” shares are up more than 20% in 2013,” said Wien.
That would be excellent news for PEK because, through the use of swaps and other derivatives, PEK is offers exposure to China’s A shares market. Investors are already embracing PEK as the ETF went from around $11.9 million in assets under management in November to $33.2 million by the end of last year.
Teucrium Corn ETF (NYSE: CORN)
CORN certainly had its moments in 2012 as a savage Midwest drought sent the fund surging from around $36 in June to near $53 in August. While CORN closed below $44 on Wednesday, a return to old highs and a move to new ones may not be out of the question if Wien’s call is correct. The investing legend sees corn surging back to $8 per bushel this year and wheat heading to $9 per bushel.
SPDR Gold Shares (NYSE: GLD)
In 2012, gold futures rose for the twelfth consecutive year, but naysayers would argue that the bulk of the yellow metal’s gain were accrued in anticipation of the third quantitative easing announcement. Those naysayers might also be apt to say even with the benefit of the QE3 announcement, gold was unable to reclaim its highs in the $1,900 per ounce range. Wien sees that happening this year.
“Although inflation remains tame, the price of gold reaches $1,900 an ounce as central bankers everywhere continue to debase their currencies and the financial markets prove treacherous,” he said.
WisdomTree Japan Hedged Equity Fund (NYSE: DXJ)
With Japanese equities soaring and the yen plunging in the wake of Shinzo Abe’s victory as Japan’s newest prime minister, DXJ has gone from unheralded to a household name among Japan ETFs.
Wien had this to say about Japan: “The Japanese economy remains lackluster and the yen declines to 100 against the dollar. The Nikkei 225 continues the strong advance that began in November and trades above 12,000 as exports improve and investors return to the stocks of the world’s third largest economy.”
With a gain of almost 13.4 percent in the past month, DXJ is clearly participating in investors’ reborn bullishness toward Japanese stocks. What is important to remember about DXJ is that it does not need Japan’s domestic economy to be strong to move higher. That is because the index tracked by the ETF uses a screening feature to weed out Japanese firms that are highly dependent on their home nation for the bulk of their revenue. If Wien is correct in his Japan outlook, DXJ could prove to be one of this year’s best-performing developed market ETFs.
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