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)
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)
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.