Has the U.S. stock market likely passed its prime and should investors brace for continued declines in American equities, Treasury bonds and the dollar? According to Christopher Wood, Global Head of Equity Strategy at Jefferies Financial Group Inc., it’s a yes, as quoted on Bloomberg.

U.S. Dominance in Global Markets Nears a Tipping Point

Wood highlighted that the market value of U.S. stocks, as a percentage of the MSCI All Country World Index, hit an all-time high in late December. He compared this milestone to Japan’s market peak in 1989, suggesting that the United States might now follow a similar downtrend, the article indicated.

Wood stated that “the dollar has entered a long-term weakening cycle, which will inevitably reduce the U.S. market's share of global capitalization.” Invesco DB US Dollar Index Bullish Fund UUP is down 7.7% this year, while one of the best-performing currency ETFs is still Invesco CurrencyShares Swiss Franc Trust FXF (up 10.2% this year) and Invesco Currencyshares Japanese Yen Trust FXY (up 9.6% this year).

Europe in a Better Position?

While the S&P 500 has recently recovered from its monthly lows, it’s year-to-date decline shows that it underperformed both European and Chinese markets. The uncertainty surrounding trade tariffs is complex, but it also presents an opportunity for Europe to assert itself as an economic and geopolitical superpower, the governor of the Bank of Latvia told CNBC (read: 3 Factors Why Greenback May Remain Low Now: ETFs to Win).

Against this backdrop, if we look at the exchange-traded funds (ETFs) those have been trading around a one-year high, we would see most are from international background. Below we highlight the some of the winning ones. Most ETFs represent Europe.

Winning ETFs in Focus

Global X MSCI SuperDividend EAFE ETF EFAS – Up 12.6% Past Year

The underlying MSCI EAFE Top 50 Dividend Index invests in 50 of the highest-yielding equity securities from international developed markets across Europe, Australasia, and the Far East. The fund charges 56 bps in fees and yields 5.78% annually.

iShares MSCI Spain ETF EWP – Up 26.4%

The underlying MSCI Spain 25/50 Index consists of stocks traded primarily on the Madrid Stock Exchange. The Underlying Index is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights. The fund charges 50 bps in fees and 3.31% annually.

iShares MSCI Germany ETF EWG – Up 27.1%

The iShares MSCI Germany ETF seeks investment results that correspond generally to the price and yield performance of the MSCI Germany Index. The fund charges 50 bps in fees and yields 1.93% annually.

Story Continues

iShares MSCI Europe Financials ETF EUFN – Up 32.3%

The underlying MSCI Europe Financials Index is a free float-adjusted market capitalization-weighted index designed to measure the combined equity market performance of the financials sector of developed market countries in Europe. The fund charges 48 bps in fees and yields 4.20% annually.

Goldman Sachs ActiveBeta Europe Equity ETF GSEU – Up 11.1%

The underlying Goldman Sachs ActiveBeta Europe Equity Index is constructed using a performance-seeking methodology and invests across issuers across 15 developed market countries in Europe. The fund charges 25 bps in fees and yields 2.04% annually.

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Invesco CurrencyShares Japanese Yen Trust (FXY): ETF Research Reports

Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports

iShares MSCI Europe Financials ETF (EUFN): ETF Research Reports

iShares MSCI Germany ETF (EWG): ETF Research Reports

iShares MSCI Spain ETF (EWP): ETF Research Reports

Invesco CurrencyShares Swiss Franc Trust (FXF): ETF Research Reports

Global X Msci SuperDividend Eafe ETF (EFAS): ETF Research Reports

Goldman Sachs ActiveBeta Europe Equity ETF (GSEU): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

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