Tuesday March 11, 2014
The Russell 2000 has surged more than 250% since the March 2009 bear-market bottom, outpacing the Dow 30, S&P 500 and NASDAQ 100 by a wide margin, according to a recent report by the Wall Street Journal. These dynamics have many analysts asking just how long the small-cap market can rally without a retracement.
The WSJ quotes MKM Partners' Jonathan Krinsky as saying that "forward returns for the next few months seem neutral at best, with a fairly significant risk of a 5-10% pullback."
Investors looking for small-cap exposure may want to look outside of the U.S. for diversification. International small-cap funds haven't been performing as well as U.S. small-cap stocks and may offer a more attractive risk-reward profile at these levels, particularly for individual investors.
Thursday March 6, 2014
Funds are flowing into U.S. healthcare ETFs at the fastest rate in at least six years due to the booming biotechnology and pharmaceutical sectors. According to Bloomberg, more than half the money flowing into U.S. sector-based ETFs in January and February went into healthcare funds.
Global healthcare ETFs haven't seen as much capital inflow as domestic ETFs, but the dramatic rise in projected spending in developed countries around the world should drive them higher over the long-term.
Tuesday March 4, 2014
Sweden's economic recovery is expected to be the fastest in the Nordic region, according to the European Commission, driven by consumer spending and rebounding investment. The country's GDP is expected to grow 2.5% this year and 3.3% in 2015, which also makes it among the fastest growing in the larger European Union.
"The Swedish economy now follows a more robust growth track and economic activity is expected to gradually accelerate," said the EC report. "Gross fixed capital formation is expected to rebound sharply in the coming years, adding a new engine to economic growth."
Investors looking to capitalize on Sweden's growth may want to consider ETFs like the iShares MSCI Sweden ETF (NYSE: EWD) or the larger Global X FTSE Nordic 30 ETF (NYSE: GXF).
Wednesday February 26, 2014
Denmark's banks warned hedge funds that bets against the country's mortgage industry would be ill-advised but hedge funds continue to bet against the country's housing market.
Nykredit Realkredit A/S told Bloomberg that speculation that the AAA-rated Danish economy may be headed for a debt crisis ignores some basic facts. Near record low yields at mortgage bond auctions last week seem to confirm this sentiment among the general investment public - at least for now.
Hedge funds like Owl Creek are looking at household debt that stands at about 321% of disposable income, a world record that the OECD warned against in November. Since these are financed by short-term bonds, households may be vulnerable to interest rate swings that encourage unusual fiscal policy.
What will happen remains to be seen, but Denmark's economy is certainly unique with its low public debt and big welfare state.