June 2014 Country Rankings

Through the first 5 months of the year, country returns have been tight. The MSCI ACWI Index is up 4.22% this year and the average country is up 6.08%.

Emerging markets are gaining momentum. Over the last 3 months the MSCI EM Index is up 7.02% while the MSCI USA Index is only up 3.56% and MSCI EAFE Index is up 2.44%.

Turkey is well into a breakout within the Emerging Market region. The MSCI Turkey Index is up 37.71% over the last 3 months, outpacing the ACWI by over 34%. However, Turkey only makes up 1.73% of the emerging markets index.

Notable Moves to the Upside

• Norway… rose 11 spots from 13^th to 2^nd, and entered the top 5 for the first time. Norway has great momentum and even better valuations. The P/E on Norway is 13.3 compared to the average country at 16.9.
• Indonesia… moved into the top 5 and is currently ranked 4^th overall. They are the second best performing market this year, up 22.97%. Additionally they have one of the best fundamental profiles showing the highest ROE and internal growth rate.

Notable Moves to the Downside

• Chile… fell 3 spots and is now the lowest ranked country we follow. Despite improving performance in Latin America, Chile has had declining momentum and increasing risk. The Chilean peso is overvalued which will be an additional headwind.
• Germany… fell out of the top 5 and is now ranked 15^th overall. Fundamentals and momentum have quickly deteriorated. Germany has underperformed the average country by 5.62% over the last 3 months.

For more on countries, strategies, and movement in the model, see our full Portfolio Notes:

Issue attachment (not archived)June Portfolio Notes