Over the weekend I remembered that WisdomTree just listed a dividend weighted emerging market fund, ticker DEM.This chart compares DEM with the other broad-based emerging market funds, at least the ones I could think of.
WisdomTree says that the dividend weighting should hold up better during declines and while I have not checked all of their funds DEM seems to be passing its first little stress test.
Granted the fund is only ten minutes old and this may not mean anything for the future but the fund is making a good impression out of the blocks which is all a new fund can do.
Barron's had an article over the weekend that opined that after years of great returns some sort of serious correction or reversion to the mean would be coming. I am a huge believer in emerging markets investing but people need to realize that when things do turn there is usually pain involved. A little over a year ago I trimmed an overweight position closer to an equal weight (equalweight being high single digits) and more recently cut back on China to get back to equalweight again.
After a great run I have a tough time thinking overweight is the right allocation but zero weight is a bad idea too as they obviously could keep this run going for years. Clearly though there is no blood in the streets.
11 comments:
on timing allocation and big bets,
If I had enough funds, I would give half to roger, namely, his slow and steady strategy; and the other half would be tactical allocation. IF i had been following the latter model of which I'm mostly just wading into I would be up 20-35% ytd even with the correction going on, and with only 1-2 trades ytd per strategy (I target 4 with different roc's and different etf groups.)Just as well there are so many naysayers about tactical allocation. I consider tom k the master for he integrates a cash model too. For me, I just get stopped out or the position looses its rank to a cash asset class. Interestingly, this leaves me at 30% cash, same as tomk with his sentiments. Am I worried. Hell yeah. But if I had the cushion of bigger returns going into this correction I'd be stupid to feel any pain. FWIW, new asset classes moving fast up the ranks: gold, and short term global income funds. China and latin america still remain dominant.
Roger, Global growth remains strong...yes?.....corporate borrowing could get more expensive and be a damper, but if not too bad wouldn't the old story of multinationals be a worthy allocation? Any suggestions on how to capture this in a basket? My thoughts: DGT, BQY, or MIC.
This may seem hard to follow but I am not a fan of the multinational story in the manner that so many talk about on CNBC.
To me global growth continuing, which I believe in, is a reason to own foreign stocks.
A domestic company that derives income from other countries is benefiting from global growth but I don't think they correlate to foreign markets as much as buying in those foreign markets.
Large multinationals tend to be larger in cap size, and I wrote months ago about increasing the market cap of the portfolio as I thought we were later cycle, and still think that so you end up with these stocks but for a different reason than what i think the reader is asking.
As far as what you ask about, DGT clearly captures the group you ask about but I have exposure differently with individual stocks, which allows for a much higher yield than you get from DGT.
BQY seems to be very similar to DGT, I don't own either, but BQY has done a lot better. I am not sure why it has done better (even the NAV has done better) and I am not sure what to expect going forward so I am not sure how you pick.
I own MIC for a lot of clients and so am a big believer, but I view this is as asset class diversification and I don't think of it as a multinational, but I do think of it as somewhat defensive.
I heard a guy from Elliott Wave saying that we were entering the 5th Dimensions (hey, they had some great songs) and that we should run for the hills for the recession was nearly upon us....my paraphrase.
Then I heard someone say that if we do go into a stagflation or frank recession, that the world would still come home to the $ as the safest haven. Do you think that is sound, or is something like DBV (European currencies) might be a better hedge? Thanks. Scoot
Roger,
Thank you very much for maintaining the blog - I find it extremely enlightning and helpful. It has become my favorite place for sanity check, great observations and, generally, good discussion. I have learned a lot from you.
One question, please - you say: "equalweight being high single digits" - where do you get this weighting from? GDP? Cap weight?
I would like to check the global allocation of my portfolio vs. a weighted benchmark - I am looking for the global equity weighting for USA, Developed and Emerging economies as well as specific country weighting if possible.
Thank you,
SA.
S.A.,
The Dow Jones site has some useful information regarding global market cap & correlation data.
Dow Jones Index Data
You may have to register for current data, but it's free.
Look at the Daily Fundamental Reports -> Sizes -> All Cap -> All Styles -> USD
You can download an Excel file. It's a bit of a pain to work with as it contains some formating. Regardless, there is some pretty good info there.
AW
Why is it that when I hear an Elliot Wave "theorist" or Fibonacci number "theorist" my mind also begins pounding out the Theme from Star Trek?
Careful on DBV being "European currencies," there is more to it than that.
I always find Wisdomtree's dividend weighting ideas interesting concerning smallcap stocks and emerging market stocks.
I haven't looked at the specific stocks in these indexes, but my brain always immediately says "small companies with dividends?"
Thank you AW,
A wealth of information indeed - including, what I am looking for.
SA.
AW, my thanks as well, a wealth of information i wasn't aware of, thanks for sharing.
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