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
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own VWO.