3 Worst Global ETF Investments Of 2014
2014 was a relatively sluggish year for international markets. While the U.S. indices were setting new all-time highs seemingly year round, most international economies were reeling under global pressures. Per MSCI, the World ex-USA index is down 5.9% so far this year, while countries within the European Monetary Union ( EMU ) have turned out to be one of the most beaten down markets, having shed about 8.7% in the time frame. Emerging nations were also no better having retreated about 4.4% YTD. These were in stark contrast to the 11.9% gain seen in North America. Deflationary worries in Europe, apparent failure of Abenomics in Japan, prolonged slowdown in the world’s second largest economy China, massive crash in crude and the ensuing currency woes (as well as the broader commodity market rout) rattled investors’ faith over international investing in 2014. As the year is drawing to a close, we handpick 3 global ETFs which have severely underperformed in 2014. These ETFs should be closely watched if the macroeconomic backdrop takes longer to turn around in the New Year. AdvisorShares Accuvest Global Opportunities ETF (NYSEARCA: ACCU ) The ETF is a good choice for long-term investors seeking a broad global exposure. The fund doesn’t track any particular index and instead looks to identify countries that may outperform other equity markets on the world stage based a top-down method that considers 40 different factors. The product is structured as a fund-of-funds and holds other ETFs in its basket in order to give investors global exposure. This AdvisorShares fund is unpopular and illiquid with just $4.2 million of assets and about 20,000 shares of average daily trading volume. While low trading volume can result in higher trading costs, the use of the fund-of-funds technique and the active management strategy render the fund quite expensive with an expense ratio of 1.25%. Presently, the iShares MSCI China ETF (NYSEARCA: MCHI ) (19.69%), the iShares MSCI Sweden ETF (NYSEARCA: EWD ) (17.90%) and the iShares MSCI Thailand Capped ETF (NYSEARCA: THD ) (14.78%) occupy the top three spots. The fund is heavy on emerging Asia (33%), Developed Europe (28%) and North America (25%). Sector-wise, financials takes the top spot with a 33.8% allocation, followed by 15.7% exposure to information technology and a 10.1% allocation to industrials. The fund lost the most in the global equities space in 2014, slumping about 15.3%. AdvisorShares Athena International Bear ETF (NYSEARCA: HDGI ) This one too is an active ETF from the same issuer, AdvisorShares. The ETF seeks to generate capital appreciation through short sales of international equities. Stocks are selected using the portfolio manager’s patented behavioral research, which measures manager behavior, strategy consistency and conviction. The research also evaluates stocks to be placed in top and bottom relative weight positions within the equity universe. Additionally, the portfolio manager also utilizes equity manager and investor behavior factors to determine the most attractive markets and capitalization ranges for their short choices. Once this is done, the stocks that rank the lowest from the conviction holdings list receive allocations in the fund, based on market cap. This intensive investigation results in a higher annual fee of 1.50%. The product is fairly overlooked by investors as depicted by its AUM of only $1 million and average daily volume of about 5,000 shares. The ETF was down 15% in the 2014 time frame. WisdomTree Commodity Country Equity ETF (NYSEARCA: CCXE ) Commodities had a rough stretch this year due to a stronger dollar, favorable weather and soft demand owing to a patchy global recovery. The product is a high-yield option looking to track the stock market performances of dividend-paying companies hailing from commodity-rich nations. The product tracks the WisdomTree Commodity Country Equity Index and results in a portfolio of 161 securities with an expense ratio of 58 basis points a year. This ETF assigns 26.3% of its asset base to financial stocks followed by 20.3% in energy, 15.9% in telecom and 11.9% in material. As the name suggests, the fund looks to invest in resource-dominant nations, including New Zealand, Canada, Norway, Australia, Chile, Brazil and Russia. Regional weights vary in the range of 10.95-14.76%. The fund appears to be spread out among companies, as no firm accounts for more than 4.97% in the fund. StatoilHydro ASA (NYSE: STO ), Telecom Corp of New Zealand Ltd, and Ambev S.A. (NYSE: ABEV ) take the top three positions in the fund with asset investment of 4.97%, 3.68% and 2.73%, respectively. The fund was down 11.2% on the year.