ETF Spotlight: Vanguard Emerging Markets | ETF Trends

ETF Spotlight on Vanguard MSCI Emerging Markets ETF (NYSEArca: VWO), part of an ongoing series.

Assets: $55.4 billion.

Objective: The Vanguard MSCI Emerging Markets fund tries to reflect the performance of the MSCI Emerging Markets Index, which includes common stocks from various emerging markets.

Holdings: Top holdings as of 1/31/2012 include: Samsung Electronics, Petroleo Brasileiro (NYSE: PBR), Vale (NYSE: VALE), Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) and Gazprom.

What You Should Know:

  • Vanguard Group sponsors the fund.
  • VWO has an expense ratio of 0.20%.
  • The fund has 906 holdings and the top 10 components made up 19.1% of total net assets as of 1/31/2012.
  • Country allocations include: China 17.7%, Brazil 15.8%, Korea 14.6%, Taiwan 11.9%, South Africa 7.1%, India 7.2%, Russia 6.9%, Mexico 4.5%, Malaysia 3.0%, Indonesia 2.2%, Thailand 1.6%, Chile 1.6%, Poland 1.7%, Turkey 1.4%, Colombia 0.6%, Philippines 0.5%, Peru 0.6%, Czech Republic 0.4%, Hungary 0.4%, Egypt 0.2 and Bermuda 0.1%.
  • VWO has a 12-month yield of 2.03%.
  • “Emerging-markets equities offer greater diversification benefits for a U.S. equity-dominated portfolio, relative to international developed-markets equities,” according to Morningstar analyst Patricia Oey.
  • “VWO, like most ETFs that invest in international equities, does not hedge its foreign currency exposure, so a rising U.S. dollar environment will weigh on the returns of this fund,” Oey added.
  • VWO’s main competitor is the iShares MSCI Emerging Markets (NYSEArca: EEM). It has an expense ratio of 0.67%. [ETF Spotlight: EEM]

The Latest News:

  • Emerging market stocks are falling off a seven-month high as the U.S. and China hold off on further easing measures, which diminished demand for riskier assets, according to Bloomberg.
  • “As the U.S. economy continues to recover and with China’s manufacturing still expanding, there’s less likelihood of further monetary easing,” Castor Pang, head of research at Core-Pacific Yamaichi International Ltd., said in the article.

Vanguard MSCI Emerging Markets ETF