When it comes to accessing a particular country through an exchange traded fund (ETF) investment, is it better to choose a single-country fund or a regional?
It depends on you.
Regional ETFs give more diversified exposure across several countries, so you’re not exposing yourself to the ups and downs of any single country. If you’re the cautious type who wants to minimize risk in your portfolio, a regional fund might be the better choice. The risk/reward relationship favors regional investing, says Gary Gordon for ETF Expert.
If an investor is long-term, "buy and hold," then a broad ETF is fine. 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.
Single-country ETFs tend to be more volatile. With these funds, 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.
Among the single-country and regional ETFs available are:
- iShares MSCI Emerging Markets (EEM), up 3.3% year-to-date
- iShares S&P Latin America 40 (ILF), up 21.7% year-to-date
- SPDR S&P Emerging Middle East and Africa (GAF), up 2.3% year-to-date
- NETS S&P/ASX 200 Index Fund (AUS), up 21.7% year-to-date
- iShares MSCI Mexico (EWW), up 10.5% year-to-date
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.