The worldwide stock markets put up a stellar show in the first half of 2017, shrugging off political turmoil in Washington, Middle East tensions, increased Brexit uncertainty and high stock valuations. According to The Wall Street Journal analysis of the world’s 30 biggest stock markets by value, all but four (Canada, China, Israel and Russia) registered gains in the first half, marking the performance the best since the immediate bounce back from the depth of the 2008-09 global financial crisis.
While the S&P 500 index posted its strongest first half since 2013, the spotlight was on international investing. This is especially true as Vanguard FTSE All-World ex-US ETF VEU, targeting the international equity market, has added about 13.2% compared to a gain of 10.7% for iShares MSCI ACWI ETF ACWI, which targets the global stock market, including U.S.
The winners are spread across many corners of the globe with emerging markets leading the way. Strong corporate earnings, a pickup in economic activity in many parts of the world especially Europe, a rebound in commodity prices and support from central bank across the globe were the major contributors to the global rally. Additionally, the surge in the technology sector and Chinese giants added to the strength. Further, the Trump upheaval and spate of weak U.S. economic data lately provided an added advantage to international investing.
The lure of the international bourses is likely to remain as Europe and Britain are on track to end the cheap monetary policy era, in line with the Fed policy of tightening its stimulus program. The converging policies will push the U.S. dollar lower and other currencies higher, making international investing tempting.
Given this, we have highlighted the best performing international ETFs of 1H. Any of these strong momentum plays could be a compelling choice for investors heading into the second half, provided the economic trends persist.