Which ETFs Are 'Suicide' for Your Portfolio?

Culturally, the Japanese place such a strong emphasis on scholastic achievement…failure is simply not an option. So it’s not a big surprise to learn that Japan has the highest suicide rate of any industrialized nation.

On the other hand, how does one explain the next country in line… France. Doesn’t France shower its citizens with generous public health care? Don’t employees enjoy extraordinary job protection rules? And doesn’t the world at large envy the French for their easy-going enjoyment of life?

Yet for one reason or another, the suicide rate in France is 40% higher than the rate for Germany; it’s 100% higher than for Italy. And a recent mental health survey posits that 2/5 of the French population suffer from serious depression at one point or another.

Granted, were it not for the season, I might not have traveled along such a morbid road. In fact, my 13-year old daughter just asked to go to Knott’s Scary Farm this weekend.

Nevertheless, I found myself wondering if we’d see any of this “unhappiness” working its way into investment returns. After all, aren’t happy workers more productive? Aren’t happier people more optimistic about their employment and/or investing in their country’s companies?

To control for a “currency effect,” I chose to focus entirely on 5 founding, west European members of the European Union. They include, France, Germany, Spain, Italy and the Netherlands. The results are as follows:

European Union Suicide Rates and Corresponding Country Returns
				# Per 1 Mil		5 Yr Total Return
iShares MSCI France (EWQ)				146		35.3%
iShares MSCI Germany (EWG)				104		55.3%
iShares MSCI Netherlands (EWN)				75		47.3%
iShares MSCI Spain (EWP)				62		92.4%
iShares MSCI Italy (EWI)				54		9.5%

While France may have been one of the weakest performers over the time period, Italy had the least impressive figures. Clearly, suicide… its incidence and its acceptability… have no meaningful correlation to investment returns.

One might note, though, that 4 of the 5 euro-earning countries outscored the U.S. S&P 500 SPDR (SPY) Trust’s 9.6%. From an investing standpoint, then, it has been a suicidal endeavor to invest in companies that earn most of their profits in the less-than-mighty U.S. buck.

Full Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company may hold positions in the ETFs, mutual funds and/or index funds mentioned above.

Comments

[s.yazicioglu:]

what a silly correlation! stupid!

Oct 26 05:29 PM