A couple of months ago, I outlined a strategy for investing in country ETFs. It ranks stock markets of developed markets and a few major emerging markets by valuation and momentum.
Valuation is often one of the largest factors determining long term returns, while momentum has been more predictive of the short term. By combining both, we are trying to pick countries that have both long term and short term tailwinds.
Since I first wrote about it, there have been four additions: Singapore, Malaysia, New Zealand and Norway. I left out the first two from my list, even though I could have added them. The other two, New Zealand and Norway, I added because their respective, new ETFs (iShares MSCI New Zealand Investable Market (NYSEARCA:ENZL) and Global X Norway (NYSEARCA:NORW)) made those stock markets easily accessible.
Methodology: First, the countries are sorted by each of the metrics individually, assigning a score of 1 to the top country, 2 to the second from the top, 3 to the third from the top, and so on. The scores of the underlying metrics are then added up and re-sorted.
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