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 (read:Â Top ETF Stories of 2014 Worth Watching in 2015).
Accuvest Global Opportunities ETFÂ (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 Advisor Shares 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%.
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Presently, iShares MSCI China ETF (MCHI, 19.69%), iShares MSCI Sweden ETF (EWD, 17.90%) and iShares MSCI Thailand Capped (THD, 14.78%) occupy the top three spots. The fund is heavy on emerging Asia (33%), Developed Europe (28%) and North America (25%).
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Sector-wise, financials takes the top spot with 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%.
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Athena International Bear ETFÂ (HDGI)
