Country ETFs Crushing It

Comments

• msf

  January 28

  G7 countries are now at debt/GDP ratios that put future economic growth at risk. Rosy pictures are less rosy now. Infrastructure, health care, aging populations, all cost money that the G7 can no longer afford. And these countries are increasing military spending.

  The cost of borrowing is already choking crucial public spending in many developing economies. Now it’s raising broader alarms.
  
  For decades crushing debt has spread misery in the world’s poor and lower-income nations. But the menace of unsupportable borrowing that now hangs over the global economy emanates from some of the richest countries.
  
  And now, in six of the wealthy Group of 7 nations, the national debt equals or exceeds the country’s annual economic output, according to the International Monetary Fund.
  

  https://www.nytimes.com/2026/01/27/business/economy/government-debt-bonds.html
• Crash

  January 28

  Mark said:

  Bespoke Investment Group:
  
  Summary
  
  ° Most country ETFs are sitting on solid year-to-date returns.
  ° Here we take a look at a snapshot of more than forty country ETFs traded on US exchanges.
  ° The average year-to-date change of all these country ETFs is already above 7%, while eleven are already up 10%+ and three are up 20%+.
  
  Read
  
  As domestic equities have struggled to hang onto gains so far this year, most country ETFs are already sitting on solid year-to-date returns.
  
  Below is a snapshot of more than forty country ETFs traded on US exchanges. The average year-to-date change of all these country ETFs is already above 7%, while eleven are already up 10%+ and three are up 20%+. Peru (EPU) is up the most at +25%, followed by Colombia (COLO) and South Korea (EWY) at just over 20%.
  
  Note that all seven G7 country ETFs (highlighted in light blue) are up less than the overall YTD average, with Japan (EWJ) up the most of this small group at +4.8%. The US (SPY) ranks 2nd to last of the G7 with its 1.6% YTD gain in front of only France (EWQ) at 1.5%.
  
  Three country ETFs are in the red so far this year: Vietnam (VNAM), Kuwait (KWT), and India (INDA).

  "Unlock this article with Premium."
• Crash

  January 28 edited January 28

  28 Jan, '26: EWS (Singapore) = +5.13%. Just 4 weeks into the year.
• DrVenture

  January 28

  That chart really illustrates where investors believe the opportunity is in 2026. And it appear that they believe it is not in the U.S.
  
  Latin America, Emerging Europe and a few others seem to be on fire.
• Observant1

  January 28 edited January 28

  It would be interesting to know exactly how the U.S. dollar impacted performance.
  
  @Crash,
  I was able to access this article via Mark's link.
• Sven

  January 28 edited January 28

  It has been very productive to diversify away from US, not just 2025, but likely 2026 as well. Others brought up how QQQ out-performed everything from developed to emerging market for the past 10 years. Hello, time has changed. With the ballooning $38 trillion dollars deficit and expensive (narrow breath) S&P500 index, one can get better returns without incurring additional market risk. By adding the current political risk, you all know the answer.
  
  Institutional funds are moving elsewhere since 2025 and one can verify that on MFO Premium’s money flow.
• Observant1

  January 28 edited January 28

  The performance of U.S. stocks versus foreign stocks has historically been cyclical.
  U.S. stocks will outperform foreign stocks for a number of years.
  A transition occurs and then foreign stocks often take the lead for years.
  The duration and timing of this cycle are, of course, unpredictable.
  
  US Equity vs. International Equity 5-Year Monthly Rolling Returns
  
  
  https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html
• equalizer

  January 28

  Observant1,
  
  Good link on the international cycles. If you only look at 5,10,15 year returns, then you would invest 0% in international markets. Same for precious metals.
• Crash

  January 28

  Observant1 said:

  It would be interesting to know exactly how the U.S. dollar impacted performance.
  
  @Crash,
  I was able to access this article via Mark's link.

  Thank you. Got it now.
  
• DrVenture

  January 29

  Sven said:

  It has been very productive to diversify away from US, not just 2025, but likely 2026 as well. Others brought up how QQQ out-performed everything from developed to emerging market for the past 10 years. Hello, time has changed. With the ballooning $38 trillion dollars deficit and expensive (narrow breath) S&P500 index, one can get better returns without incurring additional market risk. By adding the current political risk, you all know the answer.
  
  Institutional funds are moving elsewhere since 2025 and one can verify that on MFO Premium’s money flow.

  to which one might refer to the usual disclaimers regarding "past returns are no guarantee...". Clearly, ex-U.S. (and small caps) have momentum going into 2026.
  
  No one can predict if that continues or reverts. But, the momentum is there at present and needs to be recognized. Just as momentum is favoring many aspects of fixed income.
  
  
  
• Crash

  January 29

  ...With the ballooning $38 trillion dollars deficit...
  
  Confused here. I thought the Big Obscene Bill was going to raise the deficit over 10 years to $7.1 trillion. Which is a doubling of the current state of affairs? (July, '25.) So we were told, eh?
• hank

  January 29 edited January 29

  Yes. Foreign holdings are doing well this year. I have no equity etfs, foreign or domestic. My Australian equity CEF (IAF) is up over 11% YTD. Just sold a bit off in a rebalance. I think the biggest single driver here is the fall in the U.S. Dollar - about 10% lower against a basket of currencies over one year according to The Guardian. One way to boost a currency is for a country's central bank to raise interest rates. There is a strong correlation. So be careful what you wish for.
  
  Not familiar with Baby Pips, but I do think their 3-point explanation of why the Dollar has weakened is accurate.
  
  The U.S. has long outperformed foreign markets. At least 75% of the commentators / pundits I've listened to in recent months feel the U.S. equity market is overvalued relative to many foreign markets - particularly large caps. I don't have the expertise to know, but suspect they're correct.
  
  Perhaps unrelated - but interesting. Microsoft (MSFT) tumbled 10% today. That had to upset a few fund carts!
  
  @Obsevant1 - The performance of U.S. stocks versus foreign stocks has historically been cyclical.U.S. stocks will outperform foreign stocks for a number of years.
  A transition occurs and then foreign stocks often take the lead for years.
  The duration and timing of this cycle are, of course, unpredictable.
  
  Yes. A bit like the tides. A single congressional bill, political pronouncement, central bank action isn't likely to alter the course. Over time, of course, those things add up and do exert a powerful effect.
  
  I've spent hours this week looking for bargain stocks in the Pacific (non-China) area to add to my newly created stock basket. Frustrating because most of the good ones are up so much over the past year. I did bite this morning and picked up a few shares of MQBKY. Fairly valued, but the $150 share price makes it a bit challenging to integrate. (No fractional trading on ADRs)
• Observant1

  January 29 edited January 29

  Crash said:

  ...With the ballooning $38 trillion dollars deficit...
  
  Confused here. I thought the Big Obscene Bill was going to raise the deficit over 10 years to $7.1 trillion.
  Which is a doubling of the current state of affairs? (July, '25.) So we were told, eh?

  The total gross national debt was $38.40 trillion as of 12/03/2025.
  The "One Big Beautiful Bill" was estimated to increase budget deficits by $4.1 trillion
  from FY 2025 - FY 2034 according to the nonpartisan Congressional Budget Office (CBO).
  These projections were made using CBO's January 2025 baseline and are subject to a degree of uncertainty.
  
  https://www.americanactionforum.org/insight/cbo-estimates-the-fiscal-impact-of-the-one-big-beautiful-bill/
• Crash

  January 29

  Observant1 said:

  Crash said:

  ...With the ballooning $38 trillion dollars deficit...
  
  Confused here. I thought the Big Obscene Bill was going to raise the deficit over 10 years to $7.1 trillion.
  Which is a doubling of the current state of affairs? (July, '25.) So we were told, eh?

  The total gross national debt was $38.40 trillion as of 12/03/2025.
  The "One Big Beautiful Bill" was estimated to increase budget deficits by $4.1 trillion
  from FY 2025 - FY 2034 according to the nonpartisan Congressional Budget Office (CBO).
  These projections were made using CBO's January 2025 baseline and are subject to a degree of uncertainty.
  
  https://www.americanactionforum.org/insight/cbo-estimates-the-fiscal-impact-of-the-one-big-beautiful-bill/

  Oh, my. But thanks for the clarification.