The triple-pronged disaster that hit Japan earlier this month -- the earthquake, tsunami and nuclear plant crisis -- doesn't appear to have dampened investor enthusiasm for the nation's prospects, at least according to the $1 billion that's come into a key Japan exchange-traded fund.
Nick Colas, the chief market strategist at ConvergEx, visited Breakout Tuesday to discuss trends and offer specifics on where investors are making their bets. The top draw for the year to date in the U.S. ETF universe? The iShares MSCI Japan Index (EWJ), at $2.3 billion of new money, or about 10% of ETF inflows in 2011.
"That's been a unique story because the money flows were very consistent all the way through the year, even before the disaster," Colas tells Jeff Macke and Matt Nesto in the accompanying video. "You had $1 billion come in [before the earthquake] and $1 billion come in afterward, so the story there is now some kind of very strong reconstruction story, better back-half GDP from recovering from that disaster, and hopefully maybe normalizing the Japanese economy around a more stable base than it was even as recently as last year."
Japan isn't the only popular country-based investment vehicle this year, with the iShares MSCI Brazil Index (EWZ) and the iShares MSCI Canada Index (EWC) both attracting considerable investor interest, but it's leading the way by far. The Brazil ETF has received right at $1.3 billion, and the Canada fund has gotten around $1.1 billion.
Colas says investors are also looking for more specific places to go. For instance, the often-discussed BRIC approach -- based on buying Brazil, Russia, India and China as a group -- appears to be undergoing a change.
"There's clearly a trend to busting apart the BRIC concept and really pointing the money at one particular target," he says.
For more of his thoughts on ETFs and money flows, be sure to check out the interview.
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- exchange-traded fund