Top Performing Country ETFs

By Matthew McCall | May 25, 2012 AAA

The last year has included several peaks and valleys for the global stock markets around the globe. Going back 12 months the SPDR S&P 500 ETF (ARCA:SPY), which tracks the large-cap stocks in the U.S., has remained nearly flat, not including dividends. This may not sound like solid performance, but it is the third best single-country ETF in the universe.
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I thought it was important to take a look at the top performing single-country ETFs over the last year to gain a perspective into what has been working for investors during this tumultuous environment.

Southeast Asia
Only two ETFs have been able to produce positive returns over the last 12 months. The top performer is the iShares Philippines Investable ETF (ARCA:EPHE) with a gain of roughly 11%. The ETF is heavily invested in the financials (38%) and industrials (20%) and is made up of a total of 38 stocks. The World Bank's most recent forecast has the country's GDP growing by 4.2% in 2012 and increasing to 5.0% in 2013. Strong domestic demand and increased government spending has been able to keep up growth in the face of a global economic slowdown. Support on the ETF is in the $25 to $26 range.

The fourth best performer with a loss of about 0.47% is the iShares MSCI Thailand Investable ETF (ARCA:THD). Similar to EPHE, the financials are the largest sector in the ETF at 34%, followed by energy at nearly 23%. The World Bank has estimated the country will grow by 4.5% in 2012 and 5.0% in 2013, also similar to the Philippines. This would be a pickup from last year when the country got hit with bad floods that slowed down the economy.

SEE: How To Pick The Best ETF

South America
The second best performer over the last year and only one of two ETFs in the green is Global X FTSE Colombia 20 ETF (ARCA:GXG) with a gain of approximately 1.6%. The ETF is a basket of 20 stocks based in Colombia with the financials (22%), energy (18%) and materials (18%) making up a large portion of the allocation. Last week the country's central bank reaffirmed the forecast that the GDP will grow between 4% and 6% in 2012. This comes after growth of 5.9% in 2011. Support on the ETF is at the $19 to $20 area.

Rounding out the top five is the iShares MSCI All Peru Capped ETF (ARCA:EPU) with a loss of around 2.6%. When investing in Peru, it's all about the materials stocks, which make up over 52% of the ETF. The financials are the other big sector with a 24% allocation in the 28 stocks in the ETF. The Peruvian central bank sees the 2012 GDP at 5.7%, a strong number, yet slower than the 6.92% the country grew in 2011. The support for the ETF is between $37 and $39.

SEE: Interpreting Support And Resistance Zones

The Bottom Line
The key to lowering overall portfolio risk while gaining exposure to a number of regions around the world is diversification. The top three ETFs over the last year come from Southeast Asia, South America and North America. This short study shows that investors willing to think outside the box and invest in countries not often talked about in the media have the ability to lower risk and at the same time increase potential returns.

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At the time of writing, Matthew McCall did not own shares in any of the companies mentioned in this article.

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