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Global And Short-Term Treasury: 2 ETFs To Watch On Outsized Volume

In the last trading session, the U.S. stocks ended their five-day losing stretch on strong earnings reports and stabilization in the Chinese market. Among the top ETFs, investors saw the SPDR S&P 500 Trust ETF (NYSEARCA: SPY ) gain 1.2%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ) move higher by 1.1% and the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) gain 0.9% on the day. Two more specialized ETFs are worth noting as both saw trading volume that was far outside of normal. In fact, both these funds experienced volume levels that were more than double their average for the most recent trading session. This could make these ETFs ones to watch out for in the days ahead to see if this trend of extra-interest continues: iShares MSCI ACWI (All Country World Index) Index ETF (NASDAQ: ACWI ) : Volume 4.9 times average This global ETF was in focus yesterday as about 5.6 million shares moved hands compared to an average of roughly 1.2 million shares. We also saw some price movement as ACWI gained 1.2% in the past session. The movement can largely be blamed on lower oil prices, uncertain economic growth worldwide, and a possible interest rate hike, which can have a huge impact on global stocks like the ones we find in this ETF portfolio. For the past one-month period, ACWI was down nearly 2.2%. The fund currently has a Zacks ETF Rank #3 (Hold). S chwab Short-Term U.S. Treasury ETF (NYSEARCA: SCHO ) : Volume 4.0 times average This short-term treasury ETF was under the microscope yesterday as more than 693,000 shares moved hands. This compares to an average trading day of around 181,000 shares and came as SCHO lost 0.4% in the session. The big move was largely the result of the uncertainty over the Fed’s interest rate outlook ahead of its meeting. SCHO added 0.2% in the past month and currently has a Zacks ETF Rank #3. Link to the original article on Zacks.com Share this article with a colleague

Investing Beyond The Borders

By Charissa Cashin, Director Fund Product Management and Development – Principal Funds After World War II, the U.S. became the world’s undisputed economic leader. American investors looking for a wide range of opportunities needed to look no further than their own back yards. Investing outside the U.S. was seen as unnecessarily risky. But today, even with the Greece-triggered euro commotion and the China stock market turmoil, those who think international investing is too risky should keep the following in mind. In China, India, and Brazil alone, the growing middle classes have propelled these economies to the size of the industrialized “G7” countries. By 2050, these countries are predicted to make up nearly half of world output, far exceeding the G7. While America undoubtedly still has a wealth of innovative companies and market leaders, opportunities abroad are increasingly plentiful. And although international investing may not be for everyone and certainly involves some risk, ignoring the opportunities beyond our borders means passing up on the potential for additional growth. Markets outside the U.S. may offer some of the best investing opportunities available right now. Technology companies in Asia are great examples. Everyone thinks of Apple (NASDAQ: AAPL ) when they think of tech stocks, but what they don’t always realize is that a lot of its components are made overseas. Those manufacturers are making a lot of money, but they’re not as overexposed as Apple – which creates a buying opportunity. There are also good prospects for under-appreciated growth in Europe, which has a lot of global, export-oriented companies. And with the strengthening of the dollar, there may be more purchasing power for these products outside of Europe. Emerging markets may be another area of opportunity. After sub-par performance over the last few years, some of these markets may offer outstanding values. Active managers keep an eye open for values like these that can lean to uncommon buying opportunities. International investing is an important way to build diversification in your portfolio. That’s because international equities don’t always move in the same way as domestic equities. When international equities are up, for instance, domestic equities may be down – and vice versa. This kind of potential for low correlation can help reduce a portfolio’s overall volatility. Add to that the potential for growth available internationally, and you have some very good reasons for considering investments beyond the U.S. borders.

The History Of The Global Equity Portfolio

One of the nice things about thinking of the world in macro terms is that you are less inclined to fall victim to a fallacy of composition. That is, in the financial world we tend not to think in terms of aggregates so we often extrapolate personal or localized experiences into broader concepts which often results in mistakes. The most common economic fallacy of composition is thinking that if you save more then you’re better off, therefore everyone else should save more. This obviously can’t be true at the aggregate level because if everyone saved more then everyone would have less income. Likewise, in “the markets” we often think of “the market” as being something like the S&P 500 (or worse, the Dow 30) when the reality is that the “stock market” is a global market that is much broader than the S&P 500. And the financial markets are much broader than the stock markets. I got to thinking about all of this as I was going through the Credit Suisse Global Investment Returns Yearbook ( see here ). They had this fabulous chart of the dynamism of the global equity market over the last 100+ years: This chart is interesting because it shows a number of things. First, the USA was once a relatively small slice of the total market cap of outstanding stocks. Second, the reason the USA has performed so well over the last 100 years is, in large part, the result of a massive capture of market share by US corporations. This has huge implications for portfolios going forward. There is, in my opinion, a strong likelihood that the USA will lose market share to foreign firms as emerging markets become the growth engine of the world and the US economy matures and slows. So a slice of global equity market exposure not only makes sense for broad diversification, but also when considering a strategic allocation towards potentially higher growth regions. This image also shows how important it is to be dynamic and forward-looking in your portfolio to some degree. John Bogle recently made headlines for stating that a US investor shouldn’t be invested abroad. I’d be willing to bet if Bogle had been in the UK in 1899 talking about his portfolio preferences, he would have said a UK investor should stay fully invested in the UK. Why even bother investing in an emerging market like the USA? I am sure that investing in the USA back then looked fairly silly to a foreign investor. That was obviously a huge mistake. The point is, the future composition of the outstanding mix of global financial assets will change and investors who shun forecasting and some degree of necessary dynamism in their portfolios are very likely to generate returns that will be based on recency bias and extrapolative expectations (expecting the future to look like the past). One of the big lessons from history is that the future rhymes, but it rarely repeats. And a little bit of intelligent forecasting about what the future might look like could go a long way to helping your portfolio in the future. Are you Bullish or Bearish on ? Bullish Bearish Neutral Results for ( ) Thanks for sharing your thoughts. Submit & View Results Skip to results » Share this article with a colleague