Which ETFs are poised to pop in 2014?
Full disclosure: I have been consistently wrong on this market for four years running. I expected inflation that never came (at least officially), I owned gold mining shares and coal stocks, and bet on rising yields.
In other words: This could be your list of ETFs to short in 2014.
That said, I do think there are pockets of the markets that hold some real potential in 2014. So, let’s take a look:
5. WisdomTree Indian Rupee Fund (ICN | C-44)
This fund is a play that’s also not for the faint of heart.
In fact, consult your doctor before even looking at the chart for ICN. The Indian rupee has been a disaster for the past three years, falling 5 percent annually. The Indian economy has also been nothing short of headache as well.
With those qualifiers in place, I actually think the rupee is a decent bet to rebound in 2014.
The country’s newly elected central bank governor Raghuram Rajan has a great pedigree: former chief economist at the IMF; predictor of the financial crisis; and former professor at the University of Chicago.
On paper, it’s hard to imagine someone more qualified to solve the mess India finds itself in.
And let’s not gloss over those problems. India has massive budget and trade deficits, runaway inflation, and political infighting that dates back decades. Still, the country doesn’t face the demographics of its emerging market neighbor, China, and its growth is unlikely to decrease further from its current level.
The reforms Rajan is putting in place in the banking system should reap immediate rewards. His influence and relationships at the IMF should allow the country to secure external financing, and the possibility of issuing dollar-denominated bonds should be rupee-positive. After years of bad policy, India finally seems to be moving in the right direction.
If that is the case, the rupee could be the surprise currency of 2014.
