March 08, 2013 at 09:00 AM EST
CAPE: A New Approach To Foreign Equity ETFs
When it comes to portfolio allocation strategies, foreign investments are certainly one of the main go-tos as investors look to various corners of the market for more meaningful and stable returns. Adding exposure to equities from around the globe not only provides great diversification benefits, it also has the to potential to produce uncorrelated returns that may be more appealing than domestic investments. But with a wide array of options, sorting through the space can seem like a rather daunting task [see Free Report: How To Pick The Right ETF Every Time]. Enter the Shiller cyclically adjusted 10-year price-to-earnings ratio: CAPE. Adam Butler, Michael Phillbrick and Rodrigo Gordillo of Darwin Funds in collaboration with Mebane Faber of Cambria Quantitative Research recently published a research paper on how they applied the CAPE ratio to over 40 countries. In its simplest form, the CAPE methodology smooths out earnings over 10 years and then adjusts for [...] Click here to read the original article on ETFdb.com. Related Posts: ETFs To Play Euro 2012 Europe ETFs: The Good, The Bad, The Ugly ETFdb Analyst Picks: Bull Run Holds For Now Looking Back At Our Rapid Fire ETF Ideas for 2012 ETFdb Analyst Picks: Optimism Fuels Rebound
When it comes to portfolio allocation strategies, foreign investments are certainly one of the main go-tos as investors look to various corners of the market for more meaningful and stable returns. Adding exposure to equities from around the globe not only provides great diversification benefits, it also has the to potential to produce uncorrelated returns that may be more appealing than domestic investments. But with a wide array of options, sorting through the space can seem like a rather daunting task [see Free Report: How To Pick The Right ETF Every Time]. Enter the Shiller cyclically adjusted 10-year price-to-earnings ratio: CAPE. Adam Butler, Michael Phillbrick and Rodrigo Gordillo of Darwin Funds in collaboration with Mebane Faber of Cambria Quantitative Research recently published a research paper on how they applied the CAPE ratio to over 40 countries. In its simplest form, the CAPE methodology smooths out earnings over 10 years and then adjusts for [...]

Click here to read the original article on ETFdb.com.

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