My article from two weeks ago, “This Market Is Weak in the Knees,” generated quite a few questions for our mailbag. Many people are looking for “alternatives” to the U.S. equity market.
To be clear, the U.S. continues to be the most stable stock market in the world. Instead of viewing non-U.S. equity markets as “alternatives,” I’d consider rebalancing a stock portfolio to increase non-U.S. exposure.
The top performing non-U.S. equity markets for 2014 are the Middle Eastern markets. In fact, the Market Vectors Gulf States(ETF)(NYSEARCA:MES) has gained 11.44% since I mentioned it on March 11 (not including dividends).
While most investors are afraid to invest in a market that’s had a huge advance, countries with strong breakouts over the past year are likely to continue showing strength.
The three countries in focus today are Egypt, the United Arab Emirates (UAE) and Qatar.
Strongest in the World
Egypt is the best performing global equity ETF this year, up 31.48%. The ETF that invests in this market is the Market Vectors Egypt Index ETF(NYSEARCA:EGPT).
The continued crackdown on political opposition in Egypt has had no negative effect on the long-term uptrend, which began in July 2013.
One may be skeptical about investing in a country where a judge just sentenced 683 people to death. But the outcome of the presidential elections in three weeks seems to be a foregone conclusion.
Abdel Fattah Al Sisi has won the endorsement of most political parties and plans to run a quiet presidential campaign, as he already has a strong lead.
Middle East Diversified ETFs
Let’s talk about two other ETFs that are diversified among