BW this week carries a good review of some of the core ETFs which are increasingly used by investors… around the globe and which form part of our model growth portfolios.
iShares MSCI EAFE Index EFA tracks a widely used benchmark for foreign developed-market stocks, with exposure to companies in Europe, Australia, and Asia. The $37.1 billion portfolio counts the likes of BP, HSBC and Toyota among its more than 800 holdings. Performance has been good as markets have rewarded global investing in recent years with an average annualized return of 14.38% over the five years ended Dec. 29, slightly ahead of its style peers, according to Standard & Poor’s, with a .35% expense ratio.
The $10.8 billion Vanguard Emerging Markets Stocks Vipers (VWO) ETF posted a 29.53% return last year, slightly below its peer average, according to S&P. The fund is cheap compared to its peers, with an expense ratio of just 0.3%. The iShares MSCI Emerging Markets Index (EEM), which tracks the same benchmark, carries expenses of 0.77%.
For finer tuning of market exposure, Vanguard do indeed offer highly cost-effective access to specific areas of the market. The $25.9 billion Vanguard European Stock ETF (VGK) and $12.3 billion Vanguard Pacific Stock ETF (VPL) provide low-cost ways to fine-tune exposure to Europe, Asia, and Pacific nations such as Australia and Japan. Both Vanguard portfolios carry low expense ratios of 0.18%.
We will be eagerly watching to see how these benchmark funds perform against, say, the wave of multi asset funds that are being launched with total expense ratios approaching 3% - wow!!
