Ride Global Growth with Developed Market ETFs | ETF Trends

Despite the focus on China and Greece, the global economy is humming along, with developed markets and related exchange traded funds potentially leading the way.

According to Morgan Stanley, the global economy could expand almost 4% in the second half of the year, compared to the 2.9% growth over the first six months, reports Simon Kennedy for Bloomberg.

Supporting global growth, international central banks’ monetary stimulus, which could even be extended by an additional 18 central banks this year, will translate into greater activity.

The investment firm also singled out developed economies as the leading force in the global economy.

“The strength of domestic demand in developed economies will be the key engine of growth,” Chetan Ahya and Elga Bartsch, Morgan Stanley’s co-chief economists, said. “We expect the global economy to continue on the path of gradual recovery.”

ETF investors who want to capitalize on the improved outlook for the developed economies can focus on Europe, Australasia and Far East, or EAFE, markets.

For instance, the iShares MSCI EAFE ETF (NYSEArca: EFA) and iShares Core MSCI EAFE ETF (NYSEArca: IEFA) both track EAFE countries. EFA and IEFA have identical country exposure, but IEFA has a cheaper fee of 0.12%, compared to EFA’s 0.33% expense ratio, and the “Core” offering also includes small-cap stock exposure. Country weights include Japan 22.6%, U.K. 20.1%, France 9.5%, Switzerland 9.5%, Germany 9.0%, Australia 6.7%, Spain 3.5%, Hong Kong 3.2%, Sweden 2.9%, Netherlands 2.8%, Italy 2.4% and Denmark 1.7%.