S&P's new ETF Research Report offers easy-to-use analysis to help you compare ETFs.
International Investing with ETFs
As the number of ETFs grows, you'll find increasing opportunities to diversify your portfolio in markets around the world, including emerging markets. For example, there are funds that focus on worldwide, regional, or single country indexes, or on specific combinations, such as Brazil, Russia, India, and China (BRIC) or those that include Middle Eastern and African markets. In evaluating these ETFs as investment options, you'll want to depend on many of the same criteria you use to differentiate among funds that invest in the United States, along with currency, political, and other risks that are relevant to overseas investments.
Expense ratios for international ETFs vary, as they do for domestic funds, with the average cost running about 0.60%. Generally, the most cost efficient of these funds are those paired with large, well-known international and global indexes, such as the MSCI EAFE, the S&P Global 100, or the Dow Jones Global Titans, though costs vary by sponsor. Bid-ask spreads may be wider than for US funds.
A Managed Advantage?
If you're investing in less-efficient markets or those where political instability may become a risk factor, you may want to consider whether you might not achieve stronger returns from actively managed funds that have the ability to concentrate on better-performing or more stable securities. That's a question that applies to index mutual funds investing in emerging markets as well.
If you're investing in less-efficient markets or those where political instability may become a risk factor, you may want to consider whether you might not achieve stronger returns from actively managed funds that have the ability to concentrate on better-performing or more stable securities. That's a question that applies to index mutual funds investing in emerging markets as well.
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