If you’re on the search for the best pasta dish in the world, your best bet is to visit Italy.
In the same sense, viewing pictures of the Great Wall of China or gazing upon the replica of the Eifel Tower in Vegas simply won’t do them justice unless you actually travel to the country and see these structures for yourself.
My point is, even though America may be the greatest nation on the face of the earth, it’s still lacking certain attractions that other countries make up for, but when it comes to trading stocks, things are different…
You don’t have to venture outside of the United States to take advantage of foreign economies, when you can just invest via country ETFs.
Whether these nations are prospering or struggling to stay afloat, there’s still money to be made!
I’ll explain how these ETFs work and show you a couple ways to piggyback on the profits in the same way the insiders do.
By definition, an ETF, which stands for exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund; however, these funds trade like a common stock on a stock exchange.
In other words, they offer an easy way to diversify your portfolio and benefit from multiple trades for the price of one.
As you probably guessed, country ETFs follow these same guidelines, but they focus on key factors that affect the nation’s overall economy. Just as the S&P 500 is used as a tool to measure the health of the U.S. economy, these ETFs provide an estimated insight for the corresponding foreign countries.
Take a look at the Turkey ETF (TUR) chart below…
From this image alone, you can see that the Turkish economy isn’t in the best place right now. Starting at the beginning of 2018, shares for this country ETF have been at a steady downfall, due to doubling tariffs on imports of steel and aluminum.
At first glance, you may be inclined to steer clear of any investments, but, contrary to what you may believe, Turkey’s crisis could’ve made you some serious cash!
Shorting TUR by betting that its stock price would go down is one way to pull profits from these particular ETFs. Any hint that an economic downturn is underway can be verified through the ETF that parallels it, which can then be used to turn the country’s losses into your gains.
It goes both ways though…
On the other hand, Saudi Arabia’s ETF (KSA) is performing quite the opposite. Take a look.
Instead of share prices dipping down, Saudi Arabia’s stock has maintained a consistent upward trajectory.
If you look closely at the chart, you’ll notice that shares have managed to bounce off the 40-week moving average (red line) more than once and by the looks of it, it’s about to do so again.
To say the least, the Saudi Arabia economy is healthy and the country ETF is there to back it. The way these shares have continued to hit the moving average and push up is a great signal for future prosperity of the nation’s economy.
So, why not slice off a piece of these earnings for yourself with an investment in KSA?
As you can see, these ETFs tell us a lot about where certain countries stand in terms of their overall economy. No matter what direction the country’s stock is travelling in, you can still earn some easy income.
The key is to stay ahead of the game and get in prior to these shifts. It would’ve been ideal to short Turkey prior to the dive it took, but riding Saudi Arabia’s stock up would’ve proven to be profitable as well.
These are contrasting examples of the worst and best performing country ETFs, but they provide good insight for how you can use them to your advantage.
Remember, you can gain exposure to international markets without having to purchase any foreign securities that happen to be subject to foreign regulations. All you have to do is invest in these ETFs.
All in all, it’s a simple way for U.S. investors to gain exposure to foreign economies that the insiders often use to earn some additional revenue.
