All-World Index Hits New Record


Chart 1 shows the FTSE All-World Stock Index ($FAW) trading at a new record high. The FAW includes stocks from 47 developed and emerging markets. It just recently cleared its 2015 high which resumed its major uptrend. That's a positive sign because it shows that the stock market rally is global in scope. The FAW, however, is heavily influenced by the U.S. market which is also at record highs. A better way to judge the performance of foreign stocks it to look at global stock indexes that don't include the U.S.

Foreign stocks are on the rise as well. Chart 2 shows the Vanguard FTSE All-World ex-US ETF (VEU) rising to the highest level since June 2015. It still needs to clear its 2014-2015 highs, but is heading in that direction. The VEU is a combination of foreign developed and emerging markets. Interestingly, the VEU has actually done better than the U.S. this year. The VEU is up 8.5% in 2017 versus a 6.3% gain for the S&P 500. Most of those gains have come from emerging markets which are up 13% this year. Most of those gains have come from Asian countries like China, South Korea, Taiwan, and India. Commodity exporters like Brazil and Russia have pulled back with commodity prices, but are starting to bounce again. Foreign developed stocks have also outpaced the U.S. this year by 1.3%. Emerging Markets and EAFE iShares (EEM and EFA) have both reached the highest levels since the middle of 2014.

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