It's Easier Than Ever To Profit From International Investing -- Here's How
Global corporations Sinopec, Vitol, Total and Glencore each earn at least $200 billion in annual sales -- but you've probably never heard of them.
It's the lack of familiarity with the world's top global
companies that keeps many of us frominvesting in foreign markets.
But in the past decade, the rules of the game have changed -- for
the better. Rather than trying to figure which foreign companies
should be in a well-rounded portfolio, many investors are seeking a
new class of exchange-tradedfunds (
) that provides all of the international exposure you'll ever need.
They're called "single-country funds" or "country-specific ETFs." For example, if you think top Japanese companieswill benefit from rising trade with China, then you might want to check out the iShares MSCI JapanIndex (NYSE: EWJ ) . ThisETF owns big stakes in Toyota (NYSE: TM ) , Canon (NYSE: CAJ ) , Honda (NYSE: HMC ) , Softbank (the country's leading internet provider) and Takeda Pharmaceuticals, one of the world's largest drug makers -- among many others.
You can now choose from dozens of ETF options, and some of the ETF providers provide country-specific exposure with unique twists. For example, Wisdom Tree's ETF strategists are big fans of dividend-payingstocks , so theyoffer ETFs such as the Wisdom Tree AustraliaDividend Fund (NYSE: AUSE ) , the Japan Small Cap Dividend Fund (NYSE: DFJ ) and the Wisdom Tree Middle East Dividend Fund (NYSE: GULF ) . Wisdom Tree also offers ETFs that focus on foreignbonds , currencies and even specific global industries such asreal estate and electric utilities.
You can read more about Wisdom Tree's offerings by clicking here.
In addition to Wisdom Tree, three other ETF providers offer the bulk of countryfund offerings: Barclays (the sponsor of the top-selling iShares funds), Global X and Market Vectors. Let's take a closer look.
This family of funds is the most extensive, with a specific ETF geared toward more than 30 countries. In fact, if you are looking to target specific countries such as Turkey, Belgium or Malaysia, these funds are your only direct path to them. Many of these funds have been around for more than a decade and have become quite popular with investors.
The ETF strategists at Global X likely realized the iShares platform already covered manybases , so they've constructed ETFs that take a slight detour from the traditional country-fund ETF approach. For example, the Global X FTSE Nordic Region ETF (NYSE: GXF ) provides exposure across Scandinavia, while the Global X Andean 40 ETF (NYSE: AND ) focused on the largest companies among the Andean nations of South America.
Global X also offers a handful of China-focused ETFs, with each one geared toward a specificinvestment theme such as consumer stocks, financial stocks, etc.
Although Van Eck , the sponsor of Market Vectors ETFs, offers a half-dozen funds focused on specific countries such as Poland, Russia, Egypt and Colombia, there are also a smattering of regional thematic ETFs, including:
Africa Index ETF (NYSE:
Gulf States Index ETF (NYSE:
- Latin America Small-Cap Index (NYSE: LATM )
When these funds catch on with investors, they can really take off. The Market Vectors Vietnam ETF (NYSE: VNM ) , for example, surged nearly 50% from December 2012 to February 2013 as that country'seconomy appears to be building a head of steam.
Action to Take --> Yet during the long haul, many of these countries are likely to keep boosting their economies at a fast pace. Indeed, theIMF expects global economic growth outside the United States and Western Europe to approach 6% in 2013. And many economists expect that trend to continue -- unless our economy, which accounts for 25% of globalGDP , hits another rough patch.
Disclosure: Wisdom Tree's founder, Jono Steinberg, is a
former superior of David Sterman.
This article originally appeared on InvestingAnswers.com:
It's Easier Than Ever ToProfit From International Investing -- Here's How
-- David Sterman
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David Sterman does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.