ETF Update: BRIC ETFs Crumble, Investors Stick with Gold ETF
BRIC ETFs Crumble and U.S. Is Left Standing
The so-called BRIC countries and ETFs were stars in 2007, but now most of those regions are finding themselves feeling a little off.
Over the past month, the S&P 500 SPDR (SPY) has outperformed every BRIC (Brazil, Russia, India and China) -focused ETF, except India, and all of the fallen countries have shown just how risky they can be.
Carl Delfeld for ETF XRAY reports that the S&P 500 has fallen 12% year-to-date, while Brazil is down 10%, Russia is down 18&, India is down about 37% and China is off by about 28%.
In the last month, though, India has been a stellar performer and is the only BRIC country putting up positive numbers.
What is interesting is that these resource rich countries were riding high, and now the fall of commodity prices has shot them down. This type of volatility is what investing abroad can entail, but the reward can also be worth it.
The flexible and ever-present U.S. economy has taken hits from high energy prices, mortgage meltdowns, and credit tightening in stride. So the U.S. dollar may be ready to set new records and begin its climb back up after a long three years.
Broad BRIC ETFs include:
- iShares MSCI BRIC Index Fund (BKF): down 25% year-to-date; Brazil, 34.6%; China, 31.5%; India, 12.6%; Russia, 11.7%
- SPDR S&P BRIC 40 (BIK): down 20.8% year-to-date; China, 38.4%; Brazil, 27.3%; Russia, 17%; India, 5.6%
- Claymore/BNY BRIC (EEB): down 20.7% year-to-date; Brazil, 57.8%; China, 18.2%; India, 7.6%; Russia, 5%
Some Staying in Gold and ETFs, Hoping for a Turnaround
Hope springs eternal: despite the retreating price of gold, some investors are still hanging on tightly to their ETFs.
Mark Hulbert for MarketWatch reports that gold is posting a loss for the year-to-date, and gold ETFs are now nearing 18% off their March highs.
Yet some gold timers are hanging in and hoping the bottom has been reached so that gold can once again resume its ascent.
Why wait? The current trend for gold isn’t heading up. Perhaps now is a good time for investors who want to be in the markets to look at trends that are moving instead of racking up losses. Our strategy is to get in when a fund crosses above its 200-day moving average, and to get out when it drops below that point or 8% off its high.
Gold Friday morning was sitting at $820.40 an ounce, a far cry from its all-time high of $1,030.80 in March.
- SPDR Gold Shares (GLD): down 1% year-to-date; down 17.8% from March 17 high
- iShares COMEX Gold (IAU): down 0.9% year-to-date; down 17.8% from March 17 high
- PowerShares DB Gold (DGL): down 2.8% year-to-date; down 18% from March 17 high
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This article has 6 comments:
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Aug 18 12:46 AMMore by Tom Lydon