We have seen some buying interest in two Vanguard International Equity geared ETFs lately, the familiar VWO (Vanguard FTSE Emerging Markets, Expense Ratio 0.14%, $59 billion in AUM) and VEU (Vanguard FTSE All-World ex-U.S., Expense Ratio 0.11%, $20 billion in AUM) packing in more than $450 million apiece.
This continues VWO’s impressive showing in 2017 in terms of attracting new assets, with more than $6.6 billion entering the fund during this time frame while VEU has added a not too shabby $2.8 billion. The 2017 inflows have paced VWO well ahead of the two next largest competitors in the “Emerging Markets Equity” space, IEMG (iShares Core MSCI Emerging Markets, Expense Ratio 0.14%, $35.9 billion in AUM) and EEM (iShares MSCI Emerging Markets, Expense Ratio 0.72%, $35 billion in AUM), which as we have documented in this piece on several occasions this year, have also seen a trend of very healthy inflows.
Similarly, VEU with its sizable inflows year-to-date also maintains a significant lead over the next largest fund in the “Global ex-U.S.” segment which is also a Vanguard fund, VXUS (Vanguard Total International Stock, Expense Ratio 0.11%, $8.9 billion in AUM).
VWO and IEMG of course both have the same expense ratio, and this likely speaks volumes about the growth of IEMG to the point where it has surpassed its much more tenured and more expensive sister ETF EEM. EEM has historically had the more liquid and actively traded underlying options market when compared to VWO and that may continue to be the case, but it is hard to ignore the size that VWO has grown to relative to its iShares competitors IEMG and EEM.
When we look at the top country weightings within VWO currently we see the following: 1) China (27%), 2) Taiwan (16%), 3) India (11%), 4) Brazil (7%), and 5) South Africa (7%). Notably absent here in VWO is South Korea, which of course has been in the headlines on a constant basis this week in regards to the North Korea nuclear tensions. EEM, which we covered earlier this week of course holds a 16% weighting in South Korea as it is the second largest weighting in the fund, so VWO may be an interesting play going forward for this reason alone.
The Vanguard FTSE Emerging Markets ETF (NYSE:VWO) was trading at $42.41 per share on Friday morning, up $0.13 (+0.31%). Year-to-date, VWO has gained 19.49%, versus a 10.49% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.