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Buy ‘Em While They’re Ugly: A Japan ETF for the Portfolio
I like having at least one of these types of investments in our portfolios
I came across this article today on www.seekingalpha.com, which describes the five most-hated ETFs.
I like having at least one of these types of investments in our portfolios. They can add convexity to returns, since the downside of beaten down sectors such as these are often pretty low – especially compared to their upside if they transform into “swans.”
My choice from these five are Japanese stocks. I like their proximity to China, but prefer large-cap issues that do a lot of exporting, as opposed to smaller cap names (even though the latter are cheaper from a valuation standpoint). My choice in expressing this view is EWJ.
Disclosure: Author is long EWJ.
You can also follow Ben Warwick on Twitter at @QESAlpha.
About the Author
Ben Warwick, Quantitative Equity Strategies
Veteran investment strategist Ben Warwick brings 20 years of investment management expertise to AdvisorOne.com in his blog, Searching for Alpha. His market and economic insights provide readers with an insider’s view on generating alpha through asset allocation, the use of strategic portfolio “tilts” and alternative investments.
Ben Warwick founded Quantitative Equity Strategies (QES) in 2002 as a platform for implementing his quantitative investment strategies. The firm manages assets with traditional long-only equity and fixed income, private equity, managed futures and alternative investment mandates. QES has developed an industry leading expertise in building investment programs that can replicate alternative returns, while offering daily liquidity and transparency. These products include the HFRq, a hedge fund replication strategy developed in concert with Hedge Fund Research in Chicago; the Managed Futures Beta Index, with Aspen Partners; and the Nomura QES Modeled Private Equity Returns Index (PERI), which was developed with Nomura Bank and Preqin, the leading source of information in the private equity industry.
He is the author of several books, including "Searching for Alpha: The Quest for Exceptional Investment Performance," (Wiley, 2000) and "The Handbook of Managed Futures," with Carl Peters, (McGraw-Hill, 1996). He can be reached at ben@qesinvest.com.
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