Country classification has gotten really interesting in the past couple of years with the rising interest in emerging and frontier markets. But that's probably just my inner unrepentant nerd talking.

Right now, in the wake of MSCI’s reclassification of Israel as a developed market, I’m working on a rundown of the country classifications of four major index providers: MSCI, Dow Jones, FTSE and Standard & Poor’s.

The evolution of emerging markets (and sometimes devolution of developed markets—see Greece, which could lose developed-market status in the FTSE indexes) is just particularly fascinating to me. Take some of the frontier/emerging markets that the index providers cover at the very bottom rungs of the investability ladder: Latvia? Slovakia? Trinidad & Tobago? Mauritius?

Frankly, I’m dying to know what the investment stories are behind these tiny, tiny markets. And while I believe frontier markets (like, say, Vietnam) offer some awesome investment opportunities, is anyone really itching to

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Toronto-based adviser taking advantage of rally to sell high-flying stocks and buy more of his favorite bond ETFs and DFA funds.

 

Mike Bayer considers himself a contrarian investor.

In the past few months, as stock markets soared, that sort of go-against-the-grain approach has taken center stage.

The Toronto, Canada-based adviser and president of Strategic Analysis Capital Management says he prefers to buy exchange-traded funds and mutual funds from Dimensional Fund Advisors when they’re out of favor.

“The problem most investors have is that they tend to trade too frequently and make changes in the wrong direction. They’re buying high and selling low,” said Bayer, who works with individual and institutional clients in Canada and the United States.

Since early March, SACM has been taking advantage of the rally in stocks to rebalance client portfolios. Bayer has been trimming positions in the Vanguard Emerging Markets Stock ETF (NYSE: VWO).

“Emerging markets have had a big run-up in

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Last August, in an exclusive article to Oxford Club members, I badmouthed decoupling - the theory that the rest of the world (particularly emerging economies) could somehow party on while the U.S economy endured a recession.

A quick glance at the scoreboard proves my criticism was spot-on…

While the S&P 500 Index slumped 38.5% in 2008, 30 countries witnessed drops of 50% or more. Even more telling, the poster children for the decoupling trade: Brazil (-41.2%), Russia (-72.4%), India (-52.45%) and China (-65.39%) didn’t escape punishment either, despite wild predictions they would…

Clearly, the old adage still applies, “When the United States sneezes, the rest of the world catches a cold.” (Or in some cases, like Russia, they get pneumonia.)

So why resurrect the past? Because decoupling diehards won’t let this junk science die. And sadly, another warning is in order…

Decoupling 2.0 - Redefining The Theory

On the back of an

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Decoupling Is Still Dead And Here’s The Proof

by Louis Basenese, Advisory Panelist Senior Analyst, The Oxford Club

Last August, in an exclusive article to Oxford Club members, I badmouthed decoupling - the theory that the rest of the world (particularly emerging economies) could somehow party on while the U.S economy endured a recession.

A quick glance at the scoreboard proves my criticism was spot-on…

While the S&P 500 Index slumped 38.5% in 2008, 30 countries witnessed drops of 50% or more. Even more telling, the poster children for the decoupling trade: Brazil (-41.2%), Russia (-72.4%), India (-52.45%) and China (-65.39%) didn’t escape punishment either, despite wild predictions they would…

Clearly, the old adage still applies, “When the United States sneezes, the rest of the world catches a cold.” (Or in some cases, like Russia, they get pneumonia.)

So why resurrect the past? Because decoupling diehards won’t let this junk science die.

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New ProShares ETFs aim to provide 200% leverage to four key international markets.

 

If you think international markets are on the verge of a new leg up in the ongoing broad global rally, a few more tools via exchange-traded funds are now available to provide more leverage.

ProShares launched on Wednesday four ETFs taking 200% positions in four popular foreign indexes. Two are broad in geographic reach and each adds to existing ProShares ETFs that take inverse positions with the same benchmarks.

The new ProShares are the:

ProShares Ultra MSCI EAFE (NYSE Arca: EFO) ProShares Ultra MSCI Emerging Markets (NYSE Arca: EET) ProShares Ultra FTSE/Xinhua China 25 (NYSE Arca: XPP) ProShares Ultra MSCI Japan (NYSE Arca: EZJ)

These ETFs each seek to capture 2 times the daily performance of their underlying benchmarks. That's something to consider since rival Direxion recently moved to introduce a series of leveraged ETFs that track monthly index performances. (See related article here.)

In theory, being able to track a longer return period should

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ProFunds Group, the world’s largest manager of short and leveraged funds, announced today that it is launching four new ProShares ETFs, the first designed to seek twice the daily returns of indexes covering developed foreign markets, emerging markets, China and Japan. The new ETFs will be listed on NYSE Arca today.

“With some international markets posting strong year-to-date returns, investors are expressing interest in tools that allow them to gain magnified exposure to these markets,” said Michael L. Sapir, ProFunds Group Chairman and CEO. “These new ETFs complement our existing ETFs that are designed to provide short (or inverse) exposure to the same international indexes. Over the coming weeks, we plan to further expand our international offerings with ETFs covering more regions and specific countries.”

ProShares

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According to Bloomberg, Yale’s endowment “was valued at $17 billion in December, a decline of -25% since June 30.” The value of the Harvard endowment dropped by -22% over that period.

As is the case at Harvard, Yale’s endowment owns a variety of alternative investments, but it also has disclosed holdings in a handful of U.S.-list equities. We recently took a look at Harvard’s strategy and noted the prevalence of international-focused ETFs in its portfolio. It turns out that its Ivy League rival Yale appears to be pursuing a similar strategy.

Looking at Yale’s top U.S.-listed holdings at the end of Q1, the endowment’s top position was in ETF iShares MSCI Emerging Markets Index (EEM). Yale also had positions in ETFs iShares MSCI EAFE Index Fund (EFA) and iShares S&P 100 Index (OEF).

Full Story: http://finance.yahoo.com/news/Yale-Endowment-Portfolio-indie-15369280.html?.v=1

Today we are featuring top-performing "short equity" mutual funds. Investors can find such funds by checking out the entire list of the Zacks #1 Rank Short Funds list..

3 Solid Samples

ProFunds UltraBear Inv (URPIX) seeks daily investment results that match twice the inverse of the performance of the S&P 500 Index. It provides leveraged exposure to the S&P 500 Index.

URPIX primarily focuses on futures contracts, options on futures contracts, options contracts, swaps, forward contracts and other financial instruments rather than investing in securities like common stock of companies.

Unit holders have to make a minimum initial investment of $15,000 to enter this nondiversified fund. The Zacks#1 Rank ("Strong buy") fund distributes dividends and capital gains annually. It had outdone 1055.96% of its peers in terms of annual return in 2008.

UltraShort International ProFund (UXPIX) seeks daily investment results, before fees

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Portfolio manager studies historic long-term volatility patterns of indexes. Then, he applies two distinct options strategies using ETFs. 

 

Jim Herrell considers himself a nontraditional index investor.

The chief investment officer at Partnervest Financial Group says his contrarian investing strategies take a more proactive approach to exchange-traded funds.

“We view volatility as an asset class unto itself that’s negatively correlated with equity indexes,” said Herrell.

The Santa Barbara, Calif.-based Partnervest manages portfolios for advisors across the country. It’s part of a growing number of asset managers acting as outsourcers to independent planning firms.

Demand for such specialists is growing rapidly, according to industry statistics, as other aspects of financial planning—such as estate, health care and tax issues—are becoming more complex.

Partnervest was founded nearly seven years ago by ex-executives of a large asset manager based in Scottsdale, Ariz., that focused on serving high net worth clients and institutions

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The major indices for developed and emerging markets were created in 1994.  This post presents 10-year price charts for the S&P 500 index versus the MSCI EAFE (developed) markets index and versus the MSCI emerging markets index.

These discreet fixed length periods may be helpful as you evaluate portfolio weights for US (proxies SPY and IWV), developed market (proxies EFA and VEA) and emerging market (proxies EEM and VWO) equities.

Most performance representations are for X years in the past to the present.  These charts are each 10 years in length beginning January 1st of 1994, 1995, 1996, 1997, 1998 and 1999.

Ten years is often referred to as the period over which everything usually works out (that is not always the case, but it is a good observation period).  We think sequential 10-year periods provide helpful perspective when thinking about allocation between US, other developed and emerging market stocks.

There are only six

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