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Foreign Investing With International ETF’s (EEM, VWO, DGS)

July 12th, 2009

foreign world marketsGRANULARITY HAS COME TO INTERNATIONAL ex-change-traded funds, multiplying the opportunities for investors to profit. There were 21 funds of any type available on global markets back in 1997. Today there are 174 U.S. ETF listings, worth about $141 billion, focused on foreign exposures that range from global business sectors to specific countries, commodities, and dividend and fixed-income plays,” Reports John Hintze from Barrons.

Hintze continues “And where once Eastern Europe, Latin America and Southeast Asia were lumped together in an emerging-markets fund, now you also can play copper prices in Peru, political uncertainty in Turkey, or improved corporate governance in Indonesia, courtesy of ETFs.”  “The tool box available today really does give investors exposure to virtually any slice of the world economy, and all different types of products,” says Deborah Fuhr, global head of ETF research and implementation strategy at Barclays Global Investors.

“NUANCE IS PARTICULARLY IMPORTANT right now. Some of the most successful emerging-market ETFs, such as iShares MSCI Emerging Markets Index (ticker: EEM) and the less expensive Vanguard Emerging Markets Stock Fund (VWO), are heavily weighted toward large-cap companies reliant on exports — especially to developed countries. “The U.S. is still the largest consumer out there, and Western Europe is second, so you end up with a highly levered play on the developed economies,” Says Scott Burns, director of ETF analysis at Chicago’s Morningstars.  That’s probably not where you want to be,” Hintze reports.

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“To benefit from those countries’ growing internal markets, Morningstar recently recommended the WisdomTree Emerging Markets SmallCap Dividend (DGS) ETF , which tracks the eponymous index run by New York-based WisdomTree. Its holdings in small-cap stocks across numerous sectors and countries should help investors avoid the earnings challenges that those countries’ large-cap names — often commodities exporters could face if developed economies remain weak,” Hintze reports.

Full Story: HERE

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NYSE:DGS, NYSE:EEM, NYSE:VWO


 

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