Strategies · Core
Reversal Effect in International Equity ETFs
Fade multi-year country or regional ETF winners and buy the laggards — a slow reversal, not a weekly bounce.
Definition
Long-horizon (often 3–5 year) return reversal across country ETFs. Rebalance infrequently. This is value-ish (cheap because it lost) without a fundamental ratio. Overlaps PPP/CAPE country value.
Why it matters
It is a cheap way to express ‘what went down a lot might be cheap’ at index level. The risk is a structurally declining market.
Case
Japan for decades looked like a reversal candidate. A 3-year rule would have been early many times. Horizon is the product.
How to read it
Formation length and whether you require a valuation confirm. Pure price reversal on a dying industry is a value trap at country scale.
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