A Global ETF on the Cheap
July 9th, 2014 at 8:00am by Tom Lydon
Total stock market exchange traded funds are popular. Year-to-date inflows of almost $3.1 billion for the Vanguard Total Stock Market ETF (NYSEArca: VTI) prove as much. The iShares Core S&P Total US Stock Market ETF (NYSEArca: ITOT) is no slouch either with over $1.3 billion in assets under management.
Investors looking for the efficiency and familiar stock exposure offered by U.S.-focused ETFs such as ITOT and VTI can carry that approach to global offerings with the Vanguard Total World Stock ETF (NYSEArca: VT).
With VT, “Investors still get a good chunk of U.S. exposure — roughly 50 percent of VT is in the U.S. Another 40 percent is in international developed markets, and 10 percent in emerging markets. After the U.S., Japan and the United Kingdom have the biggest weightings, at eight percent and seven percent, respectively,” reports Eric Balchunas for Bloomberg.
Balchunas also highlighted a couple of other interesting points pertaining to VT. Home to almost 6,250 stocks, the fund holds more stocks than any other ETF. Additionally, VT’s annual expense ratio of 0.18% makes it one of the least expense global ETFs. That expense ratio is lower than 87% of comparable funds, according to Vanguard.
VT is not a small ETF and it has hauled in $227 million in assets under management this year. However, that is well behind the combined $7.3 billion that has flowed into the Vanguard FTSE Developed Markets ETF (NYSEArca: VEA) and the Vanguard FTSE Europe ETF (NYSEArca: VGK). [First Half ETF Flows]
VT tracks the FTSE Global All-Cap Index. Eight of the ETF’s top-10 holdings are U.S.-based companies with Royal Dutch Shell (NYSE: RDS-A) and Nestle (PK: NSRGY) the outliers. VT’s top-10 holdings represent just 7.5% of the ETF’s weight, according to Vanguard.
North America and Europe combine for nearly 77% of the ETF’s geographic exposure. VT’s P/E ratio is 18.8 and its price-to-book ratio is 2.1. VT’s turnover rate was 11.8% as of the end of its last fiscal year in October 2013, according to Vanguard data. [Spotlight on Total Global Offering]
Vanguard Total World Stock ETF
ETF Trends editorial team contributed to this post.
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.