Disecting Foreign ETFs

January 28th at 1:39am by Tom Lydon

3405303329 Roger Nusbaum of TheStreet.com compares exchange traded funds (ETFs) for broad scale foreign exposure.  With new ETFs popping up, one may want to know how to judge one from another.

iShares MSCI EAFE (EFA) will be joined by Vanguard’s version which will include Canada. StateStreet already has introduced SPDR MSCI ACWI ex-US (CWI) that includes Canada.  Both EFA and CWI hold very similar country weights, top holdings and sector weights.  So what’s different about them?  Well, CWI has more emerging market exposure, (13% versus EFA’s 3%) although mostly in Asia.  In the end, emerging markets may add a little more return and volatility.  And the market cap in CWI is $6.8 billion versus $37 billion for EFA. 

Another way to get foreign exposure on a broad scale is WisdomTree DIEFA High-Yielding Equity Fund (DTH) which weights by dividend instead of cap weighting and is up 25% since last June.

The ETF provider is not the issue when comparing funds, this is yet another example of how closely investors must look before investing their money.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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