In a recent e-mail conversation with The Sun, he mentioned why Chinese ETFs are his preference over Chinese stocks.
Emerging markets like China and India present lot of opportunities, maybe too many opportunities to make good picks. Did you look at China ETFs? They may not have the huge gains as individual stocks, but the risk is relative lower as well.
The Sun has a point. Emerging markets are more volatile than well established markets, and since my exposure to foreign equities is quite limited, I’m eager to reduce my risk as much as possible. Although I disagree to owning ETFs over stocks in your high risk portfolios, they would be a smart investment for my Fidelity Roth IRA. ETFs incur lower expense ratios than traditional mutual funds, yet trade like stocks. The unique characteristics of the ETF allow investors to diversify risk as mutual funds do at a cheaper cost.
So I did some investigating, and found the top performing International ETFs over the past 3 years.
1. iShares MSCI Brazil Index (EWZ)
A large percentage, almost 23%, of this fund owns Petroleo Brasileiro (PBR), an oil and gas driller/explorer.
2. ISHARES S&P LAT AM40 (IFL)
The top holding is America Movil (AMX). I reviewed America Movil Stock in October.
3. ISHARES MCSI MEXICO INDEX FD (EWW)
This fund invests heavily in America Movil, making up 25.09% of the ETF holdings. That’s an exorbitant amount to invest in one company. You might as well hold the AMX stock.
4. ISHARES MCSI AUSTRIA INDEX FD (EWO)
Does anyone trade Austrian equities? I’m new on this one.
5. BLDRS Index Funds Trust – BLDRS Emerging Markets 50 ADR Index Fund (ADRE)
This fund carries a few big winners: Taiwan Semiconductor (TSM), America Movil SA, and China Mobile (read my stock analysis on China Mobile Ltd). I’m adding this fund to my watch list.
[...] My Worst Example of lack of focus: Foreign ETFs – When Barclay’s released their Ishares ETFs, I quickly bought into a few emerging markets ETFs because of their massive growth potential. What I failed to realize was ETFs are completely incongruent with my non-retirement investing portfolio. About a month later, I sold off the ETFs, and blew $30 in commission fees total (buying and selling them off). It’s easy to buy into the latest hot stock, mutual fund, or ETF, but is that popular security appropriate for your portfolio? [...]
[...] Today, there are ETFs for everything, ranging from certain commodities and sectors to an entire country’s stock exchange. ETFs could easily become the future of retirement investing for a variety of [...]
[...] explosion of growth in the ETF industry has been both a boom and a bust for investors looking to make top dollar in the stock [...]