The S&P 500 is up 6.3% year-to-date (YTD). In the past five years the index has more than doubled. Compared to the performance of the S&P 500, many of the developed market indices are in the negative territory so far this year.The returns of the some major markets YTD are listed below:

UK’s FTSE 100: -5.3%
France’s CAC 40: -3.9%
Germany’s DAX : -5.9%
Spain’s IBEX 35: 4.3%
Canada’s S&P/TSX Composite: 6.8%
Japan’s Nikkei: -6.1%

Considering the solid performance of the US markets in the past 5 years and relatively decent performance this year some investors may be tempted to stay away from investing in foreign developed markets. However past performance shows that the U.S. is always not the top performer among developed markets. In fact, the U.S. has only outperformed the other developed markets only twice (in 2011 and 2013) in the past 10 years as shown in the chart below:

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Source: Henderson Global Investors

Note:  The returns shown above are based on the country’s respective  MSCI country index.

A few observations from the above chart:

• German stocks yielded a positive return in 8 out of the past 10 years.
• Norway is another top performer with 8 years of positive returns.
• In most of the years shown, Japan’s returns have been a relatively average.
• Similar to Germany, UK was also down in just 2 of the 10 years.

Related ETFs:

1. iShares MSCI Australia ETF (EWA)
2. Global-X Norway ETF (NORW)
3. iShares MSCI United Kingdom ETF (EWU)
4. iShares MSCI Canada Index Fund (EWC)
5. SPDR S&P 500 ETF (SPY)

Disclosure: No Positions

Dividends are an important factor that must be considered when selecting equities. This is because dividends provide a cushion to a well-diversified portfolio during adverse market conditions and also provide an income stream. More importantly they help boost the total returns of an investment especially over the long-term. According to a research study by Allianz Global Investors dividends accounted for 40% of the total return on equity investment in the past 40 years. Many other studies have also shown that dividends form a substantial portion of the total returns.

When evaluating total returns it is wise to review the contribution of dividends and share price gains.The following chart shows the Contribution of Dividends and Share Price Gains to Total Returns from 1970 and 2014(annualized) across select global regions:

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Source: Dividend strategies in times of financial repression, Allianz Global Investors

Dividends accounted for 42% of the equity returns for the MSCI Europe during the period shown. Although dividend yields were low in absolute terms, they also contributed more one-third of the total performance for other regions as well including North America (MSCI North America) or Pacific (MSCI Pacific).

Related ETFs:

• iShares Dow Jones Select Dividend ETF (DVY)
• SPDR S&P Dividend ETF (SDY)
• Vanguard Dividend Appreciation ETF (VIG)
• Vanguard High Dividend Yield ETF (VYM)
• SPDR DJ Euro STOXX 50 ETF (FEZ)
• iShares Asia/Pacific Dividend ETF (DVYA)

Disclosure: No Positions