Categories: Exchange Traded Funds (ETFs)International Investing

A Global Fund Emerges

While my previous ETF Talk covered VTI, a fund that spans the entire American market, the Vanguard FTSE Emerging Markets ETF (VWO) differs by giving investors exposure to a swath of developing nations’ markets.

VWO adheres to an index that contains a large number of global companies, varying in size from small to large cap. The countries included in the index cover a wide range, including popular BRIC (Brazil, India, Russia and China) economies and less focal countries in the world of investing, such as South Africa. The index contains a large number of companies and weights them using a market-cap-based system.

Emerging markets had a disappointing 2014, and VWO fell 2.72%. However, this fund has begun a rebound and is already up 3.45% year to date in just more than a month of trading. VWO’s assets under management total $48 billion, making it the world’s fifth-largest ETF. The fund’s holdings match the index it tracks closely, including weightings. VWO’s 2.84% dividend yield offers income, and its expense ratio is a low 0.15%.

This ETF’s largest sector holdings are financial services, 28.98%; technology, 15.25%; and basic materials, 8.64%. VWO’s 10 largest investments hold 14.98% of its assets. These holdings include Tencent Holdings Ltd. (TCEHY), 1.98%; China Mobile Ltd. (CHLKF), 1.82%; Taiwan Semiconductor Manufacturing Company (TSM), 1.78%; China Construction Bank Corporation (CICHF), 1.76%; and Industrial and Commercial Bank of China Ltd. (IDCBY), 1.57%.

If you think 2015 could be the time when emerging markets rise above their lackluster performance of 2014 to become one of this year’s bull markets, then Vanguard FTSE Emerging Markets ETF (VWO) may be right for you.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a U.S. market ETF. I also invite you to comment in the space provided below.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/