- S-Network Global Indexes
- Posted September 1, 2017
A Rising Tide Lifts These Boats in Particular
The global economy is booming. In fact, the OECD is forecasting that all 45 countries it tracks will have positive economic growth this year and next, for the first time since 2007.
Projections for India, China and Indonesia lead the pack by a wide margin, while the U.S. (at 2.1%) is expected to lag behind the global average of 3.5%.
If such widespread and steady growth comes to fruition, we can expect that US companies with global presence will reap benefits.
This is exactly what we are seeing so far this year in the performance of the S-Network US Foreign Revenue Index (SNUSFR), which consists of the 100 equities in the S-Network US Large-Cap 500 (SN500) that have the highest percentages of revenue derived from foreign sources. It is up 16.5% YTD on a total return basis, compared with 11.9% for the S&P 500.
The complement of SNUSFR, the S-Network US Domestic Revenue Index (SNUSDR), which comprises equities with the highest percentage of domestic revenues, is up a mere 2.4%...
Aiding this trend is the performance of the U.S. Dollar, which has declined against a trade weighted basket of foreign currencies by 7.1% since the beginning of the year. This is also generally associated with outperformance by SNUSFR, since U.S.-based companies that collect revenues in foreign currencies can get more dollars in exchange (but suffer from the opposite effect when the dollar is strong).