U.S. Vs. U.K. ETFs: 4th Of July Edition

by on July 4, 2013 | ETFs Mentioned:

Since their inception, ETFs have made their way into countless portfolios, giving investors access to nearly every corner of the global market. In light of U.S. markets closing July 4th to celebrate Independence Day, we are looking into the historical battle for returns between U.S. markets and their British counterparts [check out the 25 Wild ETF Charts From 1H 2013].

Independence Day Investments

Below, we outline two strong representations from each economy: The SPDR S&P 500 (SPY, A) and the MSCI United Kingdom Index Fund (EWU, A-) [try our Free ETF Head-To-Head Comparison Tool].

AdvisorShares is based in the Washington D.C. metro areaSPY has had a great year, featuring both strong returns and low volatility, while EWU has fallen victim to the U.K.’s continuing economic concerns. While both funds have recently had lower returns, each holds the potential to come out of 2013 stronger than they entered. Now we take a closer look at the currency war raging between the dollar and pound, represented by the DB USD Index Bullish (UUP, A) vs CurrencyShares British Pound Sterling Trust (FXB, A-).

UUP - Exchange Traded Funds - ETF Price Chart for DB US Dollar Index Bullish Powershares

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UK Small Cap ETF could be on the wayBoth currencies have experienced a volatile 52 weeks, with the British pound taking a commanding lead in the fall and winter of 2012, but losing ground before spring. The USD is still suffering from the winter, but is steadily gaining lost ground this summer. Each currency still has a lot of space for improvement, but they are unlikely to do so until the economic effects of the recovery really start to take hold.  Below we take a historical view of SPY vs. EWU [Download How To Pick The Right ETF Every Time].

SPY - Exchange Traded Funds - ETF Price Chart for SPDR S&P 500 ETF

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Tracking back from when the U.S. and U.K. bottomed out in March 2009, both have gone up substantially since this record low. This recovery has not been without faults, with both markets taking heavy hits in late 2011; however, since then each has seen impressive growth.

Happy Independence Day!

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Disclosure: No positions at time of writing.