Amid the continuing churn on Wall Street, a far-reaching bit of data has gone largely unnoticed.
Consider it the canary in the coal mine for U.S. investors.
But the news isn't all bad – and I'm going to profile a great way you can profit despite the continuing woes.
But first, here's some background.
According to a recent story in the Financial Times, foreign portfolio flows into some of the major transitioning economies are down very sharply over the past year.
The story cited data released by an interesting group out of Cambridge, Massachusetts – EPFR Global Data.
According to EPFR, China and Brazil have experienced a massive drop in portfolio investment flows from abroad.
Now, this represents a huge warning for U.S.-based investors. I give you all the reasons why in my article, Finding the Cash to Fund Your Retirement – but the key point to keep in mind is that there's simply less cash available to flow into the typical investments Wall Street tries to peddle to retail investors.
For this reason – especially if you're investing for retirement income – don't get suckered into thinking that you need to pull money out of surging emerging markets and put it into the so-called "dividend" stocks of the S&P 500.
One Big Beneficiary of Changing Investment Flows
But getting back to global portfolio investment flows – there was one transitioning market that actually saw a big 53 percent gain in foreign portfolio flows over the past year. I'm talking about Indonesia.
It's a nation that's rich in resources and lower cost, increasingly skilled labor.
Over the past year, Indonesia's currency has rallied by nearly 11 percent against the dollar. And the local stock market exchange index is up over 44 percent in US dollar terms.
A few folks have started paying attention – even if the big money is still limiting where it looks to the bigger markets of China or Brazil with what’s left of their capital.
You can cash in on this growing market by buying one of my favorite, easy to own investment companies – the Aberdeen Indonesia Fund (AMEX:IF).
Aberdeen’s dividend is small, because the companies in its portfolio are reinvesting profits to build value. The fund has generated a total return of more than 51 percent – much better than even the stellar local index gains.
And here’s an added bonus – since few are paying attention, Indonesia Fund still trades at a big discount of over 7.5 percent to what its meltdown value is.
Disclosure: No positions