It used to be difficult for investors to invest in international economies in Asia or South America.
There were several hurdles and risks to overcome like:
- Currency fluctuations which meant you could lose money on a foreign stock even if it went up!
- Transparency of the business often made it difficult for foreign investors to understand a business and if it was making money
- Liquidity of foreign shares was often very low which meant large spreads and the risk of getting “stuck” in an investment.
Now, with the advent of International ETF’s, you can stay home and easily let your money do the traveling for you, often with the returns associated with hedge funds! These international ETFs allow easy trading on American exchanges and they invest only in the best-established, reputable companies of the country. This doesn’t mean these stocks can’t lose money, only that your chances of getting swindled are much lower.
Investors can now choose ETFs that focus exclusively on the stocks of a single country or an entire foreign region of countries. This reduces your risk and makes investing internationally very simple.
If you think that the Asia Pacific region will dominate growth in the future, the Vanguard MSCI Pacific (VPL) ETF provides exposure to stocks from Japan, Australia, Hong Kong, Singapore and New Zealand. Since VPL’s index is market-weighted, Japan is its biggest holding.
If you want to focus solely the land of the rising sun (Japan), theSPDR Russell/Nomura Prime Japan (JPP), provides a portfolio full of Japanese blue chips. It’s just one of ten ETFs that focus exclusively on Japan.
Other Asian ETFs, especially Chinese ETFs are hot now:
- PowerShares Golden Dragon Halter USX China (PGJ)
- iShares FTSE/Xinhua 25 China (FXI)
- Claymore/AlphaShares China Small Cap (HAO). In addition to investing exclusively in China, HAO concentrates on fast-growing Chinese small-cap stocks.
- iShares Singapore (EWS)
- iShares Korea (EWY)
- iShares Malaysia (EWM)
- iPath India ETN (INP)
- iShares Hong Kong (EWH)
- iShares Taiwan (EWT)
- iShares Turkey (TUR)
- NEW!!! Market Vectors Vietnam (VNM)
- NEW!!! Market Vectors Indonesia (IDX)
- iShares Austria (EWO)
- iShares France (EWQ)
- iShares Germany (EWG)
- iShares Spain (EWP)
- iShares Switzerland (EWL)
- iShares United Kingdom (EWU)
- iShares Sweden (EWD)
- iShares Spain (EWP)
- iShares Netherlands (EWN)
- iShares Belgium Index (EWK)
- SPDR Emerging Europe (GUR)
- iShares Eurozone EMU (EZU)
- STREETTRACKS EURO STOXX 50 (FEZ)
- NEW!!! Global X FTSE Nordic 30 ETF (GXF) - This ETF covers the Nordic nations of northern Europe including Sweden, Denmark, Norway, and Finland.
American ETFs (minus the USA):
- SPDR LATIN AMERICA ETF (GML)
- Market Vectors Africa ETF (AFK)
- SPDR S&P Emerging Middle East & Africa (GAF)
- WisdomTree Middle East Dividend (GULF)
- Market Vectors Gulf States (MES)
- iShares MSCI South Africa (EZA)
- Market Vectors Russia (RSX)
- iShares Australia (EWA)
- iShares Emerging Markets (EEM)
- Claymore/BNY Mellon Frontier Markets (FRN) This ETF attempts to capture still-tiny economies. Its top holdings include stocks of companies from countries such as Egypt, Czechoslovakia, and Qatar.
International Sector ETFs
These ETFs allow investors to to place bets on certain industries outside of the U.S.:
- WisdomTree International Communications (DGG)
- WisdomTree International Health Care (DBR)
- WisdomTree International Utilities (DBU)
- SPDR S&P International Energy (IPW)
- SPDR Barclays International Treasury Bond (BWX)
NEW Leveraged International ETFs!!!
ProShares has released leveraged international ETFs designed to seek twice the daily returns of indexes covering developed foreign markets, emerging markets, China and Japan:
- Ultra Emerging Markets (EET) - Designed to return 200% of the MSCI Emerging Markets Index
- Ultra FTSE/Xinhua China 25 (XPP) - Designed to return 200% of the FTSE/Xinhua China 25 Index
- Ultra Japan 25 (EZJ) - Designed to return 200% of the MSCI Japan 25 Index
SHORT and LEVERAGED International ETFs
These ETFs allow investors to bet on the demise or decline of international stock markets:
- UltraShort MSCI EAFE (EFU) - Designed to return -200% of the MSCI EAFE Index
- UltraShort Emerging Markets (EEV) - Designed to return -200% of the MSCI Emerging Markets Index
- UltraShort FTSE/Xinhua China 25 (FXP) - Designed to return -200% of the FTSE/Xinhua China 25 Index
- UltraShort Japan (EWV) - Designed to return -200% of the MSCI Japan Index