Valuations Full-Year 2017

CAPE Valuations September 2017

In June I wrote a post looking at a theoretical portfolio of nine ETF’s giving exposure to ten of the cheapest countries according to CAPE ratio.  This post looked at year-to-date returns from these nine holdings.  With September having now passed, it is time for an update on this performance.

The CAPE Ratio

If you are not already aware of it, the CAPE (Cyclically Adjusted Price-Earnings ratio) was created by Professor Robert Shiller and works by taking the price of a market/stock/sector and dividing it by the average of ten years of earnings, adjusted for inflation.  I highly recommend the work of Meb Faber on the CAPE ratio if you want to find out more (

As usual, I refer to the valuations as stated on the website of Star Capital, a wonderful (and free) resource kindly updated regularly.  The purpose of this post series is to take an investment in nine ETF’s at the start of each calendar year and hold them for 12 months, re-balancing each year.  At the beginning of the year I composed a portfolio of the following ten countries:

Russia, Czech Republic, Turkey, Brazil, Poland, Portugal, Singapore, Spain, Hungary & Italy.

Italy has been on somewhat of a tear this year, with its equivalent ETF up 28.17% year-to-date.  It therefore leaves this list and is replaced by Israel as the tenth cheapest market, according to Star Capital.

CAPE Valuations September 2017

So who are the cheapest ten countries as of the beginning of 2017, and how would you go about investing in them? (current CAPE ratio in brackets).

  • Russia (5.6)

The iShares MSCI Russia Capped ETF (ERUS) carries a 0.62% expense ratio and has returned -0.32% year-to-date.

  • Czech Republic (9.3)

There is no ETF for the Czech Republic at present, although the Cambria Global Value ETF (GVAL) has an 8.1% exposure to the country, with an expense ratio of 0.69%.  It has returned 12.38% year-to-date.

  • Turkey (11.1)

The iShares MSCI Turkey ETF (TUR) carries a 0.62% expense ratio and has returned 28.16% year-to-date.

  • Brazil (12.4)

The iShares MSCI Brazil Capped ETF (EWZ) carries a 0.62% expense ratio and has returned 22.81% year-to-date.

  • Poland (13)

The iShares MSCI Poland Capped ETF (EPOL) carries a 0.62% expense ratio and has returned 46.42% year-to-date.

  • Portugal (13.6)

The GlobalX MSCI Portugal ETF (PGAL) carries a 0.62% expense ratio and has returned 24.59% year-to-date.

  • Singapore (12.9)

The iShares MSCI Singapore Capped ETF (EWS) carries a 0.48% expense ratio and has returned 27.91% year-to-date.

  • Spain (13.8)

The iShares MSCI Spain Capped ETF (EWP) carries a 0.48% expense ratio and has returned 23.42% year-to-date.

  • Hungary (14.6)

The Cambria Global Value ETF (GVAL) now has a much smaller exposure to Hungary, with an expense ratio of 0.69%.  It has returned 18.04% year-to-date.

  • Italy (16.6)

The iShares MSCI Italy Capped ETF (EWI) carries a 0.48% expense ratio and has returned 28.17% year-to-date.


Performance has improved in most markets since June, with corresponding increases in CAPE valuations. As a result, you’d have added nearly 10% to your overall returns in the past three months alone.  Had you invested in each of these nine ETF’s (representing the ten countries listed) at the start of the year, you would currently be looking at a cumulative gain of 23.72% on your portfolio.

Russia has made up for its poor performance at the start of the year and now stands close to break even.  Broad performance has been impressive, offering a low-cost way to obtain exposure to equities abroad.  These figures are all of course gross of fees, but returns nevertheless have been impressive.  What’s more interesting is that nine of the original ten countries are still amongst the cheapest ten globally.


Happy investing!

If you’d like to discuss anything contained in this article, contact me on Twitter @britishinvestor, or leave a comment below.

4 thoughts on “CAPE Valuations September 2017”

  1. Interesting update again!

    Perhaps it might be helpful to give (lazy) readers the stock market EPIC codes, as I am struggling to find some of them on the uk ishares ETF site or on google finance.

    Im not a big fan of country ETFs, in a globalised world, but it is an interesting to follow nevertheless……

    1. Thanks for the comment. I’ve taken on board what you suggested and updated the post with the relevant tickers. Hope that helps!

    1. Hi Will

      A fair point, and one I have not factored in. The purpose of tracking these ETF’s is more to see whether annual returns in fact warrant investment.

      But point taken, and one I will begin to incorporate next year.

      Thanks for your comment.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.