October 31, 2006 at 8:01 am by Tom Lydon
Exchange traded funds (ETFs) are categorized into country-specific, ADR, global, global sector, regional, foreign currency and the new international sector ETFs. Carl Delfeld of Forbes looks at the differences between the categories and find it is important to look at the ETF to see what is going on. He gives examples of how a global ETF is dominated by two countries, while a regional ETF is evenly distributed among countries.
Country specific ETFs tend to be market cap weighted, such as iShares MSCI Sweden (EWD), which holds 18% of Ericsson (ERIC). Country specific ETFs can also target specific sectors, such as iShares MSCI Canada (EWC), which is 32% energy.
Global sector ETFs tend to be market value weighted, but the new WisdomTree ETFs are based on a company’s record of increasing dividends.
With a little research and understanding of the ETFs, a little international exposure can go a long way.
Tags: Canada, EWC, EWD, GUR, Sweden
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