David Vomund
Special to the Bonanza

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October 25, 2012
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Market Pulse: The rise of the internationals

INCLINE VILLAGE, Nev. - What ETF is up 50 percent over the last three months and even rose as the Dow fell 205 points last Friday? Global X Greece (GREK). Yes, Greece. Greek bondholders also have an improved outlook. Greece's 10-year bond yield, which dropped below 17 percent, hit its lowest level this year and is nearly half what it was just weeks ago.

What are other best performing ETFs? Over the last three months iShares Spain (EWP) is up 27 percent and Italy (EWI) is ahead 21 percent. Why the strength? The European Central Bank has pledged to keep the Euro intact, so the market is looking beyond the depressed economy and riots.

This is not to say that I'm recommending owning stocks in Greece, Spain, or Italy, but it does show a new trend in the global marketplace .... international markets are beginning to outperform our own. For the first time this year, broad-based international ETFs like iShares EAFE (EFA) and iShares Emerging Markets (EEM) have performed better than domestic style index ETFs.

The international ETF rally isn't just a result of a rising equity market. Our falling dollar also plays a role. A falling dollar, which is a result of the Fed's continual easy-money policy, boosts international holdings.

Attractive country ETFs include iShares Mexico (EWW), iShares Philippines (EPHE), and iShares Turkey (TUR). Less risky is iShares Pacific ex-Japan (EPP). The falling dollar also helps international bond funds. A good choice is iShares Markets Local Currency Bond Fund (LEMB). Holdings in South Korea and Brazil represent 30 percent of the portfolio.

There are also innovative ETFs to take advantage of fluctuations in the dollar. For a rising dollar, look to PowerShares US Dollar (UUP). For a falling dollar, look to PowerShares US Dollar Bearish Fund (UDN). Whether the dollar is rising or falling, our goal for clients is simple: We want more of them.

- David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.

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Tahoe Daily Tribune Updated Oct 25, 2012 11:31AM Published Oct 25, 2012 11:29AM Copyright 2012 Tahoe Daily Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.