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5 Best Bet Equities for Today`s Investment Landscape
live (public) 1.07% January 13
As we continue to look for investment ideas to measure, our interest was snagged by the title of this article written for the Motley Fool by Andrew
Index & Geography |
Price-to-Earnings (LTM) |
Net Income Margin (%) |
Return on Equity (%) |
12 Month Return |
Real GDP Growth |
|---|---|---|---|---|---|
| S&P 500 | 14.3 | 8.7% | 14.9% | 2.1% | 1.6%** |
| Shanghai Stock Exchange | 11.9 | 10.3% | 17.6% | (17.9%) | 9.1%* |
| Brazil IBOVESPA Index | 8.1 | 17.1% | 18.4% | (24.9%) | 3.1%** |
| Bombay Stock Exchange Sensex Index | 15.0 | 12.6% | 18.6% | (15.4%) | 8.8%*** |
Source: S&P Capital IQ.
*For quarter ended Sept. 30.
**For quarter ending June 30.
***For full year 2010.
The argument goes that these are good markets in which to invest. The most direct way is to buy into one of the many funds that
concentrate on specific countries or regions.
One example is to use ETF's. Andrew selected:
FTSE China 25 Index (AMEX: FXI)
MSCI Brazil Index (AMEX: EWZ)
Wisdom Tree India Earnings ETF (AMEX: EPI) , or the closed-end India Fund (AMEX: IFN)
These funds give direct and diversified access to the markets. We will add SPY to represent the US market.
Another way is to directly owning shares in some international stocks that trade on American exchanges. These companies all have the same direct exposure to a specific emerging market and pretty compelling characteristics.
|
Company Name |
Home Country |
P/ LTM Diluted EPS Before Extra Items |
Net Income Margin |
Return on Equity |
Dividend Yield |
|---|---|---|---|---|---|
| China Mobile Limited (NYSE: CHL) | China | 10.3x | 24.4% | 21.5% | 4.2% |
| Vale S.A. (NYSE: VALE) | Brazil | 4.9x | 42% | 34.2% | 4.3% |
| Petroleo Brasileiro (NYSE: PBR) | Brazil | 5.6x | 18.2% | 16.7% | 4.2% |
| Sterlite Industries India (NYSE: SLT) | India | 7.2x | 16.6% | 14.5% | 0.9% |
| Yum! Brands (NYSE: YUM) | US.-.based with huge global exposure, particularly in China | 20.1x | 10.2% | 67.4% | 2.2% |
This approach selects individual stocks and may suffer from poor
execution but is another way of gaining access to international stocks
but in a safe way based on US trading.
It will be interesting to compare these funds, the equities and our
ETF benchmark of a balanced portfolio of Dividend producing
ETFs and we will see how prescient she has been.
Asset |
Fund in this portfolio |
|---|---|
| REAL ESTATE | ICF (iShares Cohen & Steers Realty Majors) |
| CASH | CASH |
| FIXED INCOME | TIP (iShares Barclays TIPS Bond) |
| Emerging Market | VWO (Vanguard Emerging Markets Stock ETF) |
| US EQUITY | DVY (iShares Dow Jones Select Dividend Index) |
| US EQUITY | VIG (Vanguard Dividend Appreciation ETF) |
| INTERNATIONAL EQUITY | IDV (iShares Dow Jones Intl Select Div Idx) |
| High Yield Bond | HYG (iShares iBoxx $ High Yield Corporate Bd) |
| INTERNATIONAL BONDS | EMB (iShares JPMorgan USD Emerg Markets Bond) |
- 4 Funds With Pricing Power -- Total of $10K invested equally in each fund
- 4 Stocks With Pricing Power -- Total of $10K invested equally in each stock
- Retirement Income ETFs Tactical Asset Allocation Moderate -- Above funds using TAA (40% fixed income, 30% for each of the top two asset classes)
- Retirement Income ETFs Strategic Asset Allocation Moderate -- Above funds using SAA (40% fixed income, 12% for each of the five asset classes -- funds selected based on price momentum)
Portfolio Performance Comparison
| Portfolio/Fund Name | 1Yr AR | 1Yr Sharpe | 3Yr AR | 3Yr Sharpe | 5Yr AR | 5Yr Sharpe |
|---|---|---|---|---|---|---|
| Retirement Income ETFs Tactical Asset Allocation Moderate | -4% | -35% | 10% | 76% | 8% | 58% |
| Retirement Income ETFs Strategic Asset Allocation Moderate | -2% | -15% | 11% | 59% | 3% | 12% |
| 4 Funds With Pricing Power | 4% | 23% | 10% | 48% | 2% | 6% |
| 4 Stocks With Pricing Power | 13% | 45% |
The combination of the different funds perform reasonably well over
the short term, they underperform the ETF portfolio over the longer
term -- which is to be expected as the ETF dividend portfolio has
greater diversification.
| Asset | Fund in this portfolio | Price change* | Percentage |
|---|---|---|---|
| Asset1 | CHL (China Mobile Limited) | 0.0% | 10.15% |
| Asset1 | vale (Vale SA ADR) | 16.53% | |
| Asset1 | PBR (Petroleo Brasileiro Petrobras SA ADR) | 4.35% | 6.09% |
| Asset1 | YUM (Yum! Brands Inc) | 0.48% | 59.87% |
| CASH | CASH (CASH) | 0.0% | 7.36% |
* Day change on 01/13/2021.
Previous
Since 06/21/2007
| Name | YTD* Return |
1Yr AR** |
3Yr AR** |
5Yr AR** |
10Yr AR** |
15Yr AR** |
|---|---|---|---|---|---|---|
| 5 Best Bet Equities for Today`s Investment Landscape | 0.1% | 0.4% | 3.3% | 7.9% | -0.8% | |
| VFINX (Vanguard (S&P 500) Index) | 6.6% | 24.7% | 8.1% | 13.4% | 12.4% | 14.6% |
| VBINX (Vanguard Balance (60% stocks/40% bonds) | 2.6% | 14.0% | 2.5% | 7.6% | 7.6% | 9.7% |
* YTD: Year to Date
** AR: Annualized Return
| Last 1 Week* | 1 Yr | 3 Yr | 5 Yr | 10 Yr | Since 06/21/2007 |
2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Annualized Return(%) | 0.1 | 0.4 | 3.3 | 7.9 | -0.8 | 1.5 | 0.1 | 0.0 | 4.9 | 8.2 | 18.6 | 0.4 | -8.3 | -9.3 | -7.1 | 8.6 | -18.6 | 7.2 | 68.2 | -53.1 | 57.4 |
| Sharpe Ratio | NA | 0.01 | 0.1 | 0.33 | -0.06 | 0.04 | 0.01 | -0.01 | 0.27 | 0.44 | 1.66 | 0.01 | -0.35 | -0.57 | -0.42 | 0.43 | -0.71 | 0.28 | 1.69 | -0.84 | 1.29 |
| Draw Down(%) | NA | 41.8 | 44.5 | 44.5 | 45.0 | 69.7 | 1.6 | 41.8 | 12.4 | 11.1 | 8.4 | 20.7 | 25.6 | 18.7 | 18.3 | 17.2 | 25.3 | 20.6 | 21.6 | 69.7 | 21.6 |
| Standard Deviation(%) | NA | 34.6 | 23.1 | 21.7 | 21.4 | 29.8 | 16.7 | 34.5 | 12.9 | 15.7 | 10.9 | 25.6 | 23.7 | 16.2 | 17.1 | 20.1 | 26.2 | 25.7 | 40.2 | 64.4 | 43.5 |
| Treynor Ratio | NA | 0.0 | 0.03 | 0.09 | -0.01 | 0.01 | 0.0 | 0.0 | 0.06 | 0.1 | 0.22 | 0.0 | -0.09 | -0.11 | -0.07 | 0.07 | -0.18 | 0.06 | 0.53 | -0.39 | 0.3 |
| Alpha | NA | -0.04 | -0.02 | -0.01 | -0.04 | -0.02 | -0.1 | -0.05 | -0.05 | 0.05 | 0.01 | -0.03 | -0.03 | -0.07 | -0.13 | -0.02 | -0.08 | -0.03 | 0.11 | 0.0 | 0.42 |
| Beta | NA | 0.83 | 0.78 | 0.82 | 0.89 | 1.13 | 0.62 | 0.83 | 0.63 | 0.68 | 0.82 | 1.19 | 0.98 | 0.86 | 0.97 | 1.2 | 1.02 | 1.26 | 1.3 | 1.39 | 1.86 |
| RSquared | NA | 0.67 | 0.62 | 0.53 | 0.54 | 0.64 | 0.29 | 0.68 | 0.38 | 0.55 | 0.25 | 0.4 | 0.42 | 0.36 | 0.4 | 0.58 | 0.82 | 0.77 | 0.77 | 0.78 | 0.68 |
| Sortino Ratio | NA | 0.01 | 0.14 | 0.43 | -0.08 | 0.05 | 0.01 | -0.01 | 0.38 | 0.61 | 2.51 | 0.01 | -0.47 | -0.76 | -0.56 | 0.6 | -0.92 | 0.39 | 2.53 | -1.1 | 1.9 |
| Yield(%) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Dividend Growth(%) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
*: NOT annualized;YTD: Year to Date
**Inception: starting from 06/21/2007
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