Should an investor go country-specific or broad-based international with exchange traded funds (ETFs)? Carl Delfeld points out in Forbes that it depends on the type of investor your are. There are strong points for and against each.
If an investor is long term, "buy and hold", then a broad ETF is fine, plus it has a lower cost. The main concern is how the countries’ stock markets are weighted in the index. The investor needs to be aware of where their money is going to and how much. In emerging markets it’s also safer to be cautious and use a strategy such as the ETF that tracks the MSCI Emerging Markets (EEM), which has a more equal country weighting. Other options include the WisdomTree international sector ETFs and the global sector ETFs, both of which have about half their baskets in foreign stocks.
With a single country ETF one must question what kind of investor they are, your risk profile, your return objectives and the pattern of distribution in the ETF. In other words, time and research are necessary.
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.