Chartwell Launches Country Rotation ETFfolios

Chartwell Partners Asset Management has launched three Country Rotation ETFfolios called the Chartwell Country Rotation Momentum ETFfolio, the Chartwell Country Value Rotation ETFfolio, and the Chartwell Country Rotation ETFfolio. These ETFfolios are managed by Chartwell on FOLIOfn’s online brokerage platform.

Country-specific exchange-traded funds or ETFs are baskets of companies that track its stock market’s performance. Chartwell’s universe of countries is thirty with iShares ETFs representing twenty-three countries and closed-ended funds used for seven markets like Thailand and Ireland which do not yet have ETFs.

“A folio of country-specific ETFs is a great way to capture global growth and target markets that demonstrate relative value and/or momentum” according to Chartwell Managing Director Carl Delfeld.

Delfeld describes country ETFs as “hybrid plays” since developed country ETFs are dominated by large multinationals with business all over the world. He cited Germany as an example and Siemens as a company where “markets like America, India and China may be more important than its own home market”. On the other hand, Delfeld notes that “the performance of emerging market ETFs such as the Indonesia Fund are much more tied to economic conditions in their home markets.”

In selecting country ETFs for the three Country Rotation ETFfolios, Chartwell considers relative valuations, momentum, and political developments. Delfeld believes that “momentum normally works best in bull markets but placing more emphasis on relative valuations using ratios such as price-to-book, price-to-cash flow and price to recent earnings are more appropriate for choppy markets”. Chartwell has developed the country rotation model incrementally since January 2003.

But politics can trump the numbers in some situations. An example is last weeks 9% pullback in the Malaysian ETF the day after disappointing and unanticipated election results. Taiwan is showing strength recently in part due to March presidential elections that will likely lead to “closer economic ties with mainland China” while India’s stock market has lost momentum due to “concerns about its governments fiscal discipline as it approaches a general election.” Another example is Japan. It is no accident that its strongest recent performance was during the leadership of Prime Minister Koizumi and it has faltered under the rudderless direction of Mr. Abe and Mr. Fukuda.

It is also important to know what sectors dominate the country ETFs. For example, Belgium is heavily weighted to the financial sector while Sweden has substantial exposure to industrial companies.
Delfeld explained that FOLIOfn was the ideal platform for managing the Country Rotation ETFfolios since it “offers the ability to buy and sell in fractional shares and allows for the rebalancing of the folio in a single low cost transaction.”

These ETFfolios will join the other ETFfolios that are available to investors and investment advisors through Chartwell Partners on the FOLIOfn platform. These include the:

Core Conservative ETFfolio
Fixed Income ETFfolio
Global Dividend/Income ETFfolio
World Economic Freedom ETFfolio
Country Rotation ETFfolio
Country Rotation Momentum ETFfolio
Country Rotation Value ETFfolio
Global Sector Rotation ETFfolio
Global Growth ETFfolio
Emerging Markets ETFfolio
Asia-Pacific ETFfolio
China Strategy ETFfolio
Global Long/Short Strategy ETFfolio

Chartwell uses these folios as building blocks to develop custom global portfolios using a core/satellite strategy. Delfeld was a U.S. Representative to the Asian Development Bank and a consultant to the U.S. Treasury. He is a columnist for Forbes Asia, editor of ChartwellETF.com and author of "Think Global, Grow Rich", "The New Global Investor" and "ETF Investing Around the World".

For more information and media inquiries, contact Carl Delfeld at 719.264.1503 or at cdelfeld@comcast.net