With all the concern about European sovereign debt risk and the related currency and bank solvency issues, a ranking of non-US countries by those criteria may be helpful in thinking about non-US country ETFs. Those risk factors are only one angle on country views, but perhaps useful to some investors in conjunction with other data they evaluate.
This table of country risks factors by the Economist Intelligence Unit, obtained through Schwab, orders countries first by sovereign risk, and then within sovereign risk ratings they are further ranked by currency risk. The banking risk and an overall country risk rating are also shown. An explanation of the rating scale is provided at the end of the article. (Click charts to enlarge.)
Country ETFs in the table:
The Economist Intelligence Unit uses an alpha rating system, which we find a bit more difficult to read in columns and harder to sort in spreadsheets, so we converted their scale to a numeric scale for our purposes. The following table presents the alpha scale and our numeric conversion, along with the explanation of each Economist rating as presented by Schwab.
Click to enlarge
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