Top 10 International Small-Cap ETFs

NEW YORK (ETF Digest) -- In the past few years, one of the primary trends for investors was to internationalize their portfolios. A growing list of ETFs also made this possible and easier. Doing so was believed to provide more diversification and at the same time add exposure to economies with superior growth prospects. From a performance perspective, this proved rewarding until global markets, particularly debt-ridden eurozone economies, suffered serious declines.

Small-cap sectors have always exhibited the highest volatility (beta) characteristics as markets trended higher or lower. When markets trend higher, outperformance is generally exhibited and the opposite occurs as trends reverse. The latter held true in 2011 as markets declined and investors halted fund flow reversing course.

Selecting the Top 10 ETFs within declining markets may seem odd but our objective is to find those issues that are well-structured and, as conditions improve in the future, offer suitable choices given the many ETFs in this sector.

Recently markets have been hard hit overseas and most growth in equity sectors has been more U.S.-centric leaving some international sectors less in focus. This lack of interest overall combined with distrust of debt riddled overseas sectors and inherent high volatility has led to underperformance in the sector.

To add value, we feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12-month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

Subscribers to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

#10: Index IQ Canada Small Cap ETF (CNDA)

CNDA follow the index of the same name which is a market cap-weighted index tracking the overall performance of publicly traded companies domiciled and traded on a Canadian exchange. The fund was launched in March 2010. The expense ratio is .69%.

AUM equal $33 million and average daily trading volume is 9K shares. As of early late March 2012 the annual dividend yield was 1.14% and YTD return 4.11%. The one year return was -22.09%.

Data as of First Quarter 2012

CNDA Top Ten Holdings & Weightings

  1. TMX Group, Inc. (TMXGF): 2.84%
  2. Open Text Corporation (OTEX): 2.77%
  3. Quadra FNX Mining Ltd. (QUX): 2.66%
  4. AltaGas Ltd. (ALA): 2.62%
  5. Provident Energy Ltd. (PVX): 2.49%
  6. Trican Well Service, Ltd. (TOLWF): 2.35%
  7. CAE, Inc. (CAE): 2.29%
  8. Progressive Waste Solutions Ltd (BIN): 2.15%
  9. Indus Alliance Insur and Finan Srvc, Inc. (IAG): 2.15%
  10. AuRico Gold Inc (AUQ): 2.07%

 

#9: Index IQ Australia Small Cap ETF (KROO)

KROO follows the IQ Australia Small Cap Index consisting of equities with the same strategy and constituents. The fund was launched in March 2010. The expense ratio is .69%. AUM equal $17 million and average daily trading volume is and average daily trading volume is 7K shares.

As of early late March 2012 the annual dividend yield was 6.90% and YTD return 15.88%. The one year return was -11.47%.

Data as of First Quarter 2012

KROO Top Ten Holdings & Weightings

  1. Ansell Limited (ANSLF): 2.84%
  2. UGL Limited (UGL): 2.80%
  3. Seek Limited (SEK): 2.67%
  4. Monadelphous Group Limited (MND): 2.47%
  5. Bank of Queensland Ltd. (BOQ): 2.32%
  6. Graincorp Limited (GNC): 2.22%
  7. PanAust Limited (PNA): 2.15%
  8. Primary Health Care Limited (PRY): 2.08%
  9. Adelaide Brighton Limited (ABC): 2.01%
  10. Aurora Oil & Gas Ltd. (AAGLF): 1.96%

 

#8: Guggenheim China Small Cap ETF (HAO)

HAO follows the AlphaShares China Small Cap Index which utilizes a third party proprietary enhanced index to identify constituents, adjust allocations and a minimum of $200 million in market capitalization. The fund was launched in January 2008. The expense ratio is .70%. AUM equal $168 million and average daily trading volume is 105K shares.

As of early late March 2012 the annual dividend yield was 2.80% and YTD return 12.02%. The one year return was -22.29%.

Data as of First Quarter 2012

HAO Top Ten Holdings & Weightings

  1. Mindray Medical International Limited ADR (MR): 2.37%
  2. Tsingtao Brewery Co., Ltd. (TSGTF): 1.63%
  3. Guangdong Investment Ltd. (00270): 1.61%
  4. Zhaojin Mining Industry Co. Ltd. (01818): 1.57%
  5. Great Wall Motor Co., Ltd. (02333): 1.48%
  6. China BlueChemical Ltd. (03983): 1.46%
  7. Yingde Gases Group Co., Ltd. (2168): 1.44%
  8. China Shanshui Cement Group Limited (00691): 1.42%
  9. SOHO China Limited (00410): 1.30%
  10. China Everbright Ltd. (00165): 1.29%

 

#7: Van Eck Brazil Small Cap ETF (BRF)

BRF follows the Market Vector Brazil Small-Cap Index which features companies domiciled and primarily listed on an exchange in Brazil or generate at least 50% of their revenues in Brazil. The fund was launched in May 2009. The expense ratio is .62%. AUM equal $718 million and average daily trading volume is 353K shares. As of early late March 2012 the annual dividend yield was 2.51% and YTD return 20.09%. The one year return was -16.76%.

Data as of First Quarter 2012

BRF Top Ten Holdings & Weightings

  1. Totvs S.A. (TOTS3): 4.61%
  2. Klabin SA Pfd Shs (KLBN4): 3.79%
  3. Tam SA (TAM): 3.18%
  4. Gafisa SA ADR (GFA): 2.96%
  5. Br Properties Sa: 2.91%
  6. Santos Brasil Particpacoes SA: 2.72%
  7. Odontoprev S.A. (ODPV3): 2.59%
  8. Anhanguera Educacional Participacoes S.A. (AEDU3): 2.49%
  9. Sul America S.A. (SULA11): 2.46%
  10. Marcopolo S.A. (POMO3): 2.46%

 

#6: SPDR Russell/Nomura Japan Small Cap ETF (JSC)

JSC follows The Russell/Nomura Japan Small Cap Index represents approximately the smallest 15% of stocks in terms of float-adjusted market capitalization of the Russell/Nomura Total Market Index. The expense ratio is .55%.

 AUM equal $95 million and average daily trading volume is 10K shares. As of early late March 2012 the annual dividend yield was 1.63% and YTD return 5.94%. The one year return was 4.98%.

Data as of First Quarter 2012

JSC Top Ten Holdings & Weightings

  1. Wacoal Holdings Corporation (3591): 0.66%
  2. Umenohana Co Ltd: 0.65%
  3. Musashi Seimitsu Iindustry Co., Ltd. (7220): 0.59%
  4. Kaken Pharmaceutical Co., Ltd. (4521): 0.57%
  5. Mabuchi Motor Co., Ltd. (6592): 0.57%
  6. Yamato Kogyo Co. Ltd. (YMTKF): 0.52%
  7. The Aichi BankLtd. (8527): 0.51%
  8. Taisei Lamick Co., Ltd. (4994): 0.50%
  9. Nissan Shatai Co., Ltd. (7222): 0.49%
  10. Penta-Ocean Construction Co., Ltd. (1893): 0.49%

 

#5: WisdomTree Japan Small Cap ETF (DFJ)

DFJ follows the WisdomTree Japan Small-Cap Dividend Index which once deleting the top 300 listed companies then remaining companies are included based on annual cash dividends paid. The fund was launched in June 2006. The expense ratio is .58%.

AUM equal $191 million and average daily trading volume is 29K shares. As of early late March 2012 the annual dividend yield was 2.00% and YTD return 7.15%. The one year return was 6.88%.

Data as of First Quarter 2012

DFJ Top Ten Holdings & Weightings

  1. Park24 Co., Ltd. (4666): 0.82%
  2. Century Leasing System Inc. (CUASF): 0.61%
  3. Square Enix Holdings Co. Ltd. (9684): 0.60%
  4. Chiyoda Co., Ltd. (8185): 0.55%
  5. IT Holdings Corporation (ITHOF): 0.54%
  6. Yamatake Corp. (6845): 0.54%
  7. Circle K Sunkus Co., Ltd. (3337): 0.53%
  8. The Yokohama Rubber Co., Ltd. (5101): 0.53%
  9. Hikari Tsushin Inc. (9435): 0.53%
  10. Otsuka Corporation (4768): 0.52%

 

#4: Schwab International Small Cap Equity ETF (SCHC)

SCHC follows the FTSE Developed Small Cap ex-U.S. Liquid Index which consists of a small cap universe of the bottom 10% of the eligible universe with a minimum free float capitalization of $150M. The fund was launched in January 2010. The expense ratio is .35% which is lower than most.

AUM equal $169 million and average daily trading volume 41K shares. As of early late March 2012 the annual dividend yield was 3.12% and YTD return 12.49%. The one year return was -8.92%.

Data as of First Quarter 2012

SCHC Top Ten Holdings & Weightings

  1. Metro Inc. A (MRU.A): 0.49%
  2. Baytex Energy Corp (BTE): 0.48%
  3. Athabasca Oil Sands Corp (ATHOF): 0.45%
  4. New Gold, Inc. (NGD): 0.43%
  5. Franco-Nevada Corporation (FNV): 0.41%
  6. Inmet Mining Corporation (IEMMF): 0.39%
  7. Pembina Pipeline Corp (PBNPF): 0.38%
  8. Viterra, Inc. (VTRAF): 0.37%
  9. Centerra Gold Inc. (CAGDF): 0.36%
  10. ONEX Corp: 0.35%

 

#3: WisdomTree International Small Cap ETF (DLS)

DLS follows the WisdomTree International Small-Cap Dividend Index which is a fundamentally weighted index including small cap dividend paying companies that compose the bottom 25% of market capitalization in the WisdomTree DEFA index after the 300 largest companies are removed.

The fund was launched in June 2006. The expense ratio is .58%. AUM equal $425M and average daily trading volume is 32K. As of early late March 2012 the annual dividend yield was 3.64% and YTD return 12.33%. The one year return was -3.12%.

Data as of First Quarter 2012

DLS Top Ten Holdings & Weightings

  1. Cable & Wireless Communications PLC (CWIXF): 0.77%
  2. Provident Financial PLC (PFG): 0.61%
  3. Vector Limited (VCT): 0.60%
  4. Monadelphous Group Limited (MND): 0.57%
  5. Envestra Limited (ENV): 0.57%
  6. Adelaide Brighton Limited (ABC): 0.54%
  7. Consolidated Media Holdings Limited (CMJ): 0.54%
  8. CSR Limited (CSR): 0.51%
  9. Oesterreich Post AG: 0.49%
  10. Bank of Queensland Ltd. (BOQ): 0.48%

 

#2: SPDR International Small Cap ETF (GWX)

GWX follows the S&P Developed ex-U.S. Under USD2 Billion Index which consists of investable publicly traded companies domiciled in the developed countries outside the U.S. The fund was launched in April 2007. The expense ratio is .59% (higher).

AUM equal $739M and average daily trading volume is 119K shares. As of early late March 2012 the annual dividend yield was 2.85% and YTD return 13.27%. The one year return was -5.43%.

Data as of First Quarter 2012

GWX Top Ten Holdings & Weightings

  1. Shochiku Co., Ltd. (9601): 0.76%
  2. Belimo Holding AG (BEAN): 0.72%
  3. InvoCare Limited (IVC): 0.67%
  4. Paddy Power PLC (PLS): 0.66%
  5. SAI Global Limited (SAI): 0.65%
  6. Rubis (RUI): 0.58%
  7. Cheil Worldwide Inc Common Stock Krw200.: 0.55%
  8. Haw Par Corporation Limited (H02): 0.53%
  9. Corus Entertainment, Inc. B (CJREF): 0.50%
  10. Cafe de Coral Holdings Ltd. (00341): 0.49%

 

#1: iShares EAFE Small Cap ETF (SCZ)

SCZ follows the MSCI EAFE Small Cap Index follow the performance of small cap stocks in European, Australasian and Far Eastern markets. The fund was launched in December 2007. The expense ratio is .40%. AUM (Assets under Management) equal $1.4 billion and average daily trading volume is 380K shares.

As of early late March 2012 the annual dividend yield was 2.84% and YTD return 14.59%. The one year return was -4.16%.

Data as of First Quarter 2012

SCZ Top Ten Holdings &Weightings

  1. Bilfinger Berger SE (GBF): 0.40%
  2. APA Group (APA): 0.39%
  3. PSP Swiss Property AG (PSPN): 0.37%
  4. Gemalto (GTO): 0.36%
  5. Pennon Group PLC (PNN): 0.36%
  6. Davide Campari-Milano S.p.A. (CPR): 0.35%
  7. SGL Carbon AG (SGL): 0.35%
  8. Filtrona PLC (FLTR): 0.34%
  9. Elekta AB (EKTA B): 0.34%
  10. Nishi-Nippon Railroad Co., Ltd. (9031): 0.33%

 

We rank the top 10 ETF by our proprietary stars system as outlined below. If an ETF you're interested in is not included but you'd like to know a ranking send an inquiry to support@ETFDigest.com and we'll attempt to satisfy your interest.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

The ETFs chosen above represent products that are well-structured even though the sector has suffered moderate to severe losses in both performance over the past year months. Eventually these most volatile of market sectors will have their day in the sun once again and investors might pick and choose which have the most appeal and useful application to their needs.

That said, investors do need to be cautious of those ETFs with serious losses in AUM perhaps making them business losers for the sponsors. As such investors need to pay close attention to this as some funds have been closed over the last few months.

Single country funds listed above have lower ratings than those with more geographical diversification thus allowing them a higher ranking from a risk management view.

It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs. New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at ETF Digest. Follow us on Twitter and Facebook as well and join our group conversations.

You may address any feedback to: feedback@etfdigest.com  

The ETF Digest has no current positions in the featured ETFs.

 

(Source for data is from ETF sponsors and various ETF data providers)