Yahoo Finance Consider Applying the Spring Cleaning Approach to Your Portfolio
Why US Investors Are Seeking Opportunities Overseas (Part 1 of 4)
Are you devoting any spring cleaning energy to your portfolio? Amy Belew shares what the latest analysis tells us about investor trends and how it may apply to you.
Funny thing about spring. It seems so cliché, but something about this time of year motivates me to clean house or spruce up my garden or simply just get organized. I tackled getting my closet in order over the weekend, and I must admit, I definitely feel refreshed!
Our latest analysis leads us to believe that many investors are applying a spring cleaning approach to their portfolios as well, rebalancing as the first quarter ended. The latest exchange traded fund (or ETF) flows data show the industry just closed a record opening quarter. More specifically, investors are putting their money to work in markets outside the U.S. Of the $97.2 billion of net new assets raised in the first quarter, over $70 billion went into equity funds with international exposure.
Market Realist – Apply the spring cleaning approach to your portfolio by considering international stocks.
The graph above shows the total ETF flows in 1Q15 for non-US developed market equities, emerging market equities, and US equities. The flows were $71 billion, $10.7 billion, and $8.3 billion, respectively. This proves that equity ETFs with international exposures have been more popular in 2015 so far. We’ll explore the reasons for this in the coming parts.
Major developed markets (EFA), including Europe (FEZ) and Japan (EWJ) have performed well year-to-date (or YTD), mainly due to excess liquidity in the form of QE (quantitative easing).
Emerging markets (EEM), especially China (FXI), which has gained nearly 25% YTD, have done reasonably well, thanks to easy money and the recent easing of the dollar (UUP).
Meanwhile, back in the US, stocks (VOO) have been facing a number of headwinds, which has led to their relative underperformance YTD. We’ll discuss this in more detail in the next part.
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