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Top Foreign ETFs of Q3

Sanghamitra Saha
Investors need to pay close attention to Cronos (CRON) stock based on the movements in the options market lately.

The third quarter of 2018 has been subdued for the international markets. All that were prominent in the quarter were trade tensions with the United States, crisis in countries like Turkey and Argentina and shockwaves in the global market, the emerging market turmoil, and releases of downbeat GDP data from some developed counties including Euro zone.

All in all, international equities failed to sizzle in the quarter. iShares MSCI EAFE ETF EFA has added 2.6% in the past three months (as of Sep 21, 2018), iShares MSCI Emerging Markets ETF EEM has lost about 0.7%, iShares MSCI ACWI ETF ACWI has jumped 5.2% during this timeframe and iShares Asia 50 ETF AIA has nudged up only 0.7%. U.S. markets were way sturdier than foreign markets as the S&P 500 has added about 7.6%.

 

Inside the Key Issues

The U.S.-China trade tensions were alive and kicking in the third quarter with the Trump administration levying more tariffs on Chinese goods worth of $200 billion. The tariffs started at 10%, beginning Sep 24, and will shoot up to 25% on Jan 1. Beijing hit back with an additional $60 billion in American goods (read: US-Sino Trade War Escalates: Most Vulnerable Sector ETFs).

Notably, Trump has already enacted 25% tariffs on $50 billion in Chinese goods, which has been retaliated by China, mainly targeting American soybeans along with other goods (read: China's Likely Retaliation to US Tariffs & Its Impact on ETFs).

There were some region-specific headwinds as well. iShares MSCI Turkey ETF TUR was off 22.7% in the past three months (as of Sep 21, 2018). The selloff in the lira, double-digit inflation, aftereffects of policy tightening in the United States, political woes, persistent concerns about economic stability and worsening diplomatic ties with the United States have dealt a heavy blow to Turkey stocks as well as global equities  (read: Profit From Turkish Turmoil With These Global Inverse ETFs).

Though all-world was hit by the contagion of the Turkey crisis, emerging market (EM) currencies and equities were especially hit. Many emerging market assets are trading at record lows. Emerging market GDP growth declined to 4.1% in August from 4.3% in July, the lowest since April 2016, according to estimates from the Institute of International Finance, as quoted on CNBC (read: EM ETFs: A Contrarian Bet or Value Trap?).

ETFs in Focus

Against this backdrop, below we highlight a few international ETFs that have managed to stay in the green in the otherwise-subdued Q3.

Legg Mason International Low Volatility High Dividend ETF LVHI – Up 3.27%

iShares Edge MSCI International Quality Factor ETF IQLT – Up 3.11%

Arrow Dogs of the World ETF DOGS – Up 2.89%

iShares International Dividend Growth ETF IGRO – Up 2.35%

NuShares ESG International Developed Markets Equity ETF NUDM – Up 2.30%

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EMG MKT FREE AS (EFA): ETF Research Reports
 
ISHRS-MSCI TURK (TUR): ETF Research Reports
 
ISHARS-MS IDQ (IQLT): ETF Research Reports
 
LM-INT LV HD (LVHI): ETF Research Reports
 
ISHRS-MSCI ACWI (ACWI): ETF Research Reports
 
ISHARS-EMG MKT (EEM): ETF Research Reports
 
ISHARS-ASIA 50 (AIA): ETF Research Reports
 
NUS-ESG IDME (NUDM): ETF Research Reports
 
ARRW-DOGS WRLD (DOGS): ETF Research Reports
 
ISHRS-INTL DVGR (IGRO): ETF Research Reports
 
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