ETFs Take You Around The World (VEGI, FILL, PICK, RING, SLVP, EELV, IDLV, EWHS, SMIN, IDXJ)
Ron Rowland: We’re in a new age of international investing. As recently as a year ago, numerous foreign markets were off-limits to all but big, sophisticated institutions.
But now you are invited to the party. In fact, you have an engraved invitation … and the monogram says “ETF.”
Thanks to a fast-growing group of exchange-traded funds, you have the chance to invest in places you once only dreamed of. And you can do it in one quick trade.
Now whether you should invest in those places is a different matter, of course. Today I’ll outline some possibilities for you.
ETF Universe Expanding Rapidly
The number of ETFs available to U.S. investors has exploded in the last five years. There’s good reason for it, too: The ETF format simply works better than mutual funds for just about everyone. Long-term buy-and-hold investors like ETFs for their low cost, while traders appreciate their liquidity.
The trend isn’t slowing down. As of March 23, another 80 ETFs have hit the market this year, 49 of them feature some kind of international focus. I won’t list them all for you, but here are three groups you may find useful.
#1 Global Commodity Producers
If you think commodity prices are headed higher, one or more of the following ETFs may be what you’re looking for. These five new offerings from iShares specialize in various natural resource sectors.
Most important, they’re all global. That means they can own both U.S. stocks and stocks domiciled in other countries — both “emerging” and “developed” markets. That’s critical in the commodities business.
- iShares MSCI Global Agriculture Producers (NYSEArca:VEGI)
- iShares MSCI Global Energy Producers (NYSEArca:FILL)
- iShares MSCI Global Select Metals & Mining Producers (NYSEArca:PICK)
- iShares MSCI Global Gold Miners (NYSEArca:RING)
- iShares MSCI Global Silver Miners (NYSEArca:SLVP)
You can, of course, choose to invest through individual stocks in all these segments. I like ETFs because of their convenience, low cost, and diversification.
|ETFs can get you in the business|
#2 High Beta, Low Volatility
You’ve probably heard the term “beta” applied to stock investments. It sounds very complicated. But beta is just an indication of how sensitive a security is to moves in a benchmark, while volatility is a measure of its price fluctuations independent of other factors.
Aggressive investors typically look for higher-beta stocks. More conservative investors seek out lower volatility ones. A new line of PowerShares ETFs does the math for you, tracking indexes of international stocks in each classification. You can get high beta or low volatility, developed or emerging.
- PowerShares S&P Emerging Markets High Beta Portfolio (NYSEArca:EEHB)
- PowerShares S&P International Developed High Beta Portfolio (NYSEArca:IDHB)
- PowerShares S&P Emerging Markets Low Volatility Portfolio (NYSEArca:EELV)
- PowerShares S&P International Developed Low Volatility Portfolio (NYSEArca:IDLV)
#3 Country-Specific Asian Small Caps
Say you like small-cap stocks, and you also want to zero in on certain countries. Four new ETFs give you a way to do it in Hong Kong, Singapore, India, and Indonesia.
- iShares MSCI Hong Kong Small Cap (NYSEArca:EWHS)
- iShares MSCI Singapore Small Cap (NYSEArca:EWSS)
- iShares MSCI India Small Cap (AMEX:SMIN)
- Market Vectors Indonesia Small Cap (NYSEArca:IDXJ)
I especially like these last four. Why? Because they offer new ways to invest in a theme I’ve been following for years: The rise of Asia. A new age is unfolding right in front of our eyes.
Just think about it: Billions (yes, billions) of people in China, India, and surrounding regions are coming into the modern age! Moreover, they’re doing it faster than any place in history.
The breathtaking changes in Asia create all kinds of opportunities. Meanwhile ETFs make it easy for just about everyone to participate.
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended inMaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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