Take what’s happening in emerging markets, for example. As the BlackRock Investment Institute pointed out last year in a paper on investing in emerging markets, disparities among emerging markets are growing fast, as economies and financial markets mature at very different paces. As such, the paper’s authors conclude that the key in emerging market investing today is to focus on companies that generate cash flow in favored geographies, i.e. in select countries. BlackRock’s Chief Investment Strategist Russ Koesterich advocates a similar select-country approach, and you can find out which countries he likes in his latest Investment Directions monthly market commentary. Single-country ETFs are one way to express such country-specific preferences.
Misconception: When you invest in single-country funds, you’re only investing in businesses focused on one specific country.
Truth: Many of the companies in single-country funds are global players, meaning they do business both within, and beyond, their borders. This is why it’s so important to know your true exposure before you invest.
Want to learn more about single-country ETFs? Check out the BlackRock “Fund Frenzy” challenge, a fun competition that kicks off this week. You can pick a team of five single-country ETFs that you think will perform best over the course of a month. If your ETF team takes the top prize, you’ll win a $20,000 donation to a charity of your choice. Let the — misconceptions go — and the games begin.
Sue Thompson, CIMA, Managing Director, is Head of the Registered Investment Advisor Group, overseeing the firm’s iShares and 529 sales efforts with registered investment advisors, family offices and asset managers. Sue is a regular contributor to The Blog. You can find more of her posts here.
Information on the WisdomTree Japan Hedged Equity Fund is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of the fund.
International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/ developing markets, in concentrations of single countries or smaller capital markets.