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Are some countries more value-ey than others?
Old 05-10-2007, 12:17 AM   #1
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Are some countries more value-ey than others?

I slice and dice my portfolio to try to achieve the small/value premia. But, on the international side, I just do the MSCI all world. I was thinking of also doing the wisdomtree international for small cap exposure. But, looking at it a different way, are there certain countries that are more growth-ey and some that are more value-ey?

In my head, it makes sense that a country that has lots of natural resources would be a more value-like country with drilling/mining/manufacturing/etc. And countries with more dependence on technology would be more growth-ey.

Could one capitalize on a more value-ey international play by buying individual country ETFs? I wonder if anyone has done a study on whether the value premium holds up country-wide.

A quick look over morningstar for comparison: sorted from lowest P/B to highest



price/book avg mkt cap $mil
south korea 1.8 12.9
taiwan 2.2 8.7
eafe value 2.5 44.1
germany 2.6 44.9
netherlands 2.6 30.6
brazil 2.8 19.4
emerg mark 2.9 16.7
vang emerg mark 2.8 10.5
eafe 3 35.2
mexico 3.4 19.2
UK 3.5 49.7
euro stock 3.7 41.9
australia 4 18.3
south africa 4.1 7.6

Sorry for the bad list, but i was too lazy to table-ize it

So, in theory, south korea and taiwan are a value bet (until it gets into a growth stage) and south africa and australia are growth bets (until they lose value and become of a value-play).

Anyone think or use any system like this? I agree you can get some heavy duty single country risk, but it might pay off.
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Re: Are some countries more value-ey than others?
Old 05-10-2007, 07:14 AM   #2
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Re: Are some countries more value-ey than others?

No, it seems to require too much efforts to buy individual country funds to fill the international small cap portion. I would just pick one of the ETFs or funds, i.e., WisdomTree International SmallCap Dividend Fund (NYSE: DLS)
SDPR S&P International Small Cap ETF (AMEX: GWX)
DFA International Small Cap Value
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Re: Are some countries more value-ey than others?
Old 05-10-2007, 08:13 AM   #3
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Re: Are some countries more value-ey than others?

Maybe, but I would tread carefully. Acoounting conventions are different in different places, so you are not comparing apples to apples, even before we start talking about varying tax, regulatory, capital structure, and other economic factors.
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