Baron Rothschild is credited with some timeless advice. “The time to buy is when there is blood in the streets.” As volatility returned this year, it brought shaky investor sentiment back into play. Coming into 2018, U.S. valuations were extremely high, and that didn’t change after a period of strong earnings. Meanwhile, international valuations have been much more attractive. But through the first half of the year, the U.S. has continued its outperformance. That seemed to be amplified during the second quarter as the S&P 500 outperformed the MSCI ACWX by more than 6%.
Digging a little deeper uncovers some interesting prospects. Individual countries followed the S&P much more closely, and some outperformed it. Two countries in a great position for further outperformance are Canada and the United Kingdom. The iShares single-country ETFs (EWC and EWU) give broad exposure to their equity markets. We believe negative sentiment has investors missing the train on some extremely attractive investment opportunities with these two ETFs.