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Fighting Cronyism With The Corruption ETF
Featured in Zero Hedge Daniel Drew, 6/10/2015 Tweet It seems like there's an ETF for everything nowadays. From global warming ETFs to fertilizer ETFs, Wall Street has neatly packaged nearly every type of investment to attract your cash. One thing they forgot to package was corruption. Considering how they are already overflowing in it, perhaps they just took it for granted. However, for many investors, corruption is worth taking a second look. It all started with a question: Does corruption hurt stock performance? To answer this, I looked at a list of country ETFs. Then I looked at the Corruption Perceptions Index provided by Transparency International. Countries with high rankings have less corruption, and countries with low rankings have higher corruption. I took the countries with a ranking of 80 or higher and placed them in a basket called the "Low Corruption Index." (Note: Neither the U.S. or the U.K. made the cut.) Then I took the countries with a ranking of 40 or lower and placed them in a basket called the "High Corruption Index." I looked at the 5-year returns of these country ETFs. The Low Corruption Index had a return of 43.71% (dividends not included). It was led by Denmark, the least corrupt country, which gained 114%. The High Corruption Index had a return of 8.66% (dividends not included). The biggest drag was Russia, the most corrupt country, with a 34% loss. A "Corruption ETF" could capitalize on this effect by going long the Low Corruption Index and shorting the High Corruption Index. An investor in the Corruption ETF would be fighting cronyism while making money - one of those rare situations in the stock market where the concept of the "honest dollar" still exists. 5-Year Returns  High Corruption Index  Low Corruption Index  Corruption Perceptions Heat Map  5/23/2017 The Big Short 2.0: BlackRock's Consumer Asset-Backed Securities ETF 3/26/2017 Yield Chasers Left Behind As Treasuries Beat Both Investment Grade and Junk Bonds 3/9/2017 Buying The Rumor is 300% More Profitable Than Buying The News 2/25/2017 Index Investing Unmasked: 96% Of Stocks Are Garbage 2/14/2017 The Difference Between F You Money and F Everybody Money 10/11/2016 The Entire 2008 Crash Could Have Been Avoided With One Simple Trading Rule 10/10/2016 How To Avoid Being A Retail Bag Holder 10/9/2016 BTFD! One Chart Shows Why This Is The Only Strategy That Matters 8/7/2016 The Indexing End Game: The Wilshire 5000 Only Has 3,607 Stocks |