by Ron Rowland
Thursday, May 3, 2012 at 7:30am
I’m always on the lookout for investment opportunities. The last few years, most of the profit potential seems to be outside the U.S.
Thankfully, with ETFs I can get involved in foreign markets that were once off-limits. A question still nags at me, though. Am I missing something right here at home? Isn’t America still the globe’s economic powerhouse?
Sadly, the answer is no. And today I’ll show you the numbers to prove it.
GDP Tells the Tale
You can measure a nation’s growth in many ways. The most common is “Gross Domestic Product.” GDP is the sum total of all goods and services bought at the retail level. As a statistic, GDP isn’t perfect but can be a handy yardstick.
In a healthy economy, GDP should be moving up. Last week, for instance, the U.S. Commerce Department reported our GDP rose at a 2.2 percent annualized rate in the first quarter of 2012.
Is 2.2 percent good or bad? Well, it could be worse. Yet it can also be much better … and in fact GDP is much better in other parts of the world. And not just last quarter. Long-term trends reveal the same.
Don’t take my word for it. The World Bank publishes GDP numbers for 200 nations, including a few semi-autonomous places like Puerto Rico and Hong Kong.
I downloaded the annual data for the ten-year period ending in 2010. I then calculated the compounded average annual GDP growth by nation. Finally, I sorted them from fastest-growing to slowest.
Care to guess where the U.S. ranks? Here are a few hints. The U.S. is:
• Not in the top ten …
• Not in the top fifty …
• And not even in the top hundred!
In fact, you have to go all the way down to #166 (out of 200) to find the U.S. Our ten-year GDP growth was just 1.6 percent. We couldn’t even beat the 2.5 percent annual growth the World Bank’s global benchmark posted for this period.
Wow. If the growth isn’t here, then where is it? Here are the top ten 10-year compound growth rates:
- Equatorial Guinea 17.1%
- Azerbaijan 14.9%
- Turkmenistan 13.6%
- Myanmar 12.1%
- Qatar 11.8%
- Macao SAR, China 11.7%
- Angola 11.2%
- China 10.5%
- Sierra Leone 9.5%
- Afghanistan 9.1%
Equatorial Guinea, in case you are wondering, is an oil-rich country in West Africa. In fact, several of the top ten in the above list have extensive energy deposits. Rising oil and natural gas prices obviously gave those economies a boost.
Follow the Growth with ETFs
Most of these places are not yet covered by ETFs, unfortunately. In most cases, this is because their stock markets are not sufficiently developed.
As investors we can only use the tools available to us. You can do your own homework, but I’ll get you started.
Here are some ETFs covering nations with superior ten-year economic growth, according to the World Bank:
• iShares FTSE China 25 Index Fund (FXI), ranked #8
• WisdomTree India Earnings Fund (EPI), #19
• Market Vectors Vietnam ETF (VNM), #24
• iShares MSCI All Peru Capped Index Fund (EPU), #39
• iShares MSCI Singapore (EWS), #43
• Market Vectors Indonesia (IDX), #47
One word of caution: Even the fastest-growing national economies can be volatile. Timing is everything. You need to get in — and out — when the time is right.
And that’s exactly what I give my International ETF Trader members … specific trading strategies for making money with ETFs like these. In fact, I added three new picks last month that are already showing sweet gains! If you’d like to learn how to join them, RISK FREE, turn up your speakers and click here.
Best wishes,
Ron Rowland – Weiss Research