Can exchange traded funds (ETFs) with a broad-base, covering the entire globe, act as a one-stop-shop for investors? There are several ETFs that are in registration with the SEC or are available that give access to the world’s largest companies in one fund.
Rob Wherry for Smart Money points out that on the upside, buy-and-hold investors can get a low-cost way for instant diversification on a worldwide level. On the flip side, these ETFs follow static indexes that always own the same countries or companies, sectors or stocks. Investors can not pick and choose the stocks they want to avoid or own.
There are some alternatives to the all-in-one funds, including pairing the S&P Depository Receipts (SPY) with the iShares MSCI EAFE (EFA), for example. An investor worried about the state of the U.S. economy could throw in
SPDR MSCI ACWI ex-US ETF (CWI) as well, which invests in prominent markets outside of the domestic ones.
The all-in-one ETFs do give opportunity to investors. If you’re interested in being
in specific sectors or regions and are willing to do the research, then
you may not be interested in these broad-based ETFs. But for investors who’d rather just "set it and forget it," these funds give them the option to do so.
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.