Hedge Developed Market Growth With These ETFs

January 06, 2017

This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today’s article features Gary Stringer, president and chief investment officer of Memphis, Tennessee-based Stringer Asser Management.

As the pace of broad leading economic indicators have picked up, we have become more optimistic in our outlook for markets globally.

For example, improvements can be seen in the OECD Composite of Leading Economic Indicators (LEIs) for OECD (Organisation for Economic Co-operation and Development) plus the six major nonmember countries. The OECD plus nonmember economies cover all OECD countries plus the six nonmember economies: Brazil, China, India, Indonesia, Russia and South Africa.

The recent uptick in LEIs is led by ongoing stability in the U.S., a firming of China’s economic growth, as well as an end to the recession in Russia and recent depression in Brazil. Adding support to this environment, we think accelerating U.S. growth will increase demand for imports, pulling economic growth higher in other countries.

 

 

Central Bank Support

In addition to these positive LEI trends, we continue to find supportive policies coming from foreign central banks. For example, the recent European Central Bank (ECB) announcement extending its bond purchases is quite dovish. In fact, the ECB stated that asset purchases would continue through December 2017 or beyond, if necessary.

Given the political uncertainties and other macroeconomic factors facing Europe, we expect accommodative policy from the ECB for years to come.

 

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