Mon 4 Dec 2006
It’s obvious that the falling dollar has had a positive impact on International equities, but how much?? One way to compare the two is to see how much a Barclay’s International ETF has performed vs. the index upon which it’s based (trading in the local currency).? The Washington Post just ran an article analyzing this, and it found that, for example, “Year to date through Nov. 28, the EAFE index was up 17.4 percent in dollar terms but had gained only 7.9 percent in local currencies.”? When you’re thinking of rebalancing your portfolio, think about whether you want to continue making this dual bet:? that International equities will continue to flourish and that the dollar will continue to fall.? These two factors will greatly influence whether the excellent returns of 2006 will happen again in 2007.
December 4th, 2006 at 10:58 am
I left this out of the original post, but the currency effect translates to roughly 45-55% of the total returns. The dollar has had an enormous positive impact. I’m wondering how many other investors are thinking about this and if a massive rebalancing isn’t in the cards over the next 30-45 days that will equate to a significant amount of money pulling out of International funds in the short term. Be wary.
December 4th, 2006 at 10:13 pm
You can also view funds priced in other currencies via StockCharts… For example, the EFA ETF (that tracks the EAFE index) priced in Euros would be here: EFA:$XEU.
Another way to look at the performance is to look at the EFA’s performance priced in terms of gold: EFA:$GOLD…