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Wednesday, April 29, 2015

What Goes Around Comes Around...and the Patient Long Term Investor Gets Rewarded

Seems in the fickle world of active managers performance chasing is alive and well. Long term asset allocating investors will get a lift as their allocation to Europe performs well and will be trimming their positions rebalancing  as the performance chasers pile in. Via Bloomberg

Europe gets the nod as the best place to invest for the first time since at least 2009 in a Bloomberg survey of financial professionals, unseating the U.S.
Thirty-five percent of those surveyed in the Bloomberg Markets Global Poll said the euro zone would be among the one or two markets offering investors the best opportunities over the next 12 months.
It was the first time that Europe came out on top since the survey of traders, analysts, money managers and executives who are Bloomberg customers began asking that question in October 2009. The U.S., with a 33 percent share, fell to second, the first time it’s not been No. 1 since November 2010. 
Here is a one year chart of VGK, the Europe ETF vs SPY the S+P 500..think there is some performance chasing going on by those surveyed above ?
Total return year to date: Europe 9.9% (VGK) S+P 500 3.3%
The article notes the following:
Russia, Brazil and China were seen as markets to avoid over the next 12 months, with investors saying the Chinese economy is in the worst shape in two and a half years.
Looking at the chart below of FXI the China ETF vs the S+P 500 I am not so sure the next survey will have the same results. FXI is up 26.6% year to date.

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