If you already have U.S. stocks—and we suggest Canadian investors have 20% or more in their portfolios—you can also diversify beyond North America without the risk of buying individual stocks. Foreign-sector ETFs give you broad exposure to international markets with tax-efficient portfolios and low management fees.
You can benefit from one of Europe’s strongest economies and the world’s leading emerging markets—led by Asia—with these two ETFs.
Safety Means More than Just Holding On
It means real, lasting wealth that lets you rest easy
Sleep well while the best conservative stocks
compound your wealth year after year.
ISHARES MSCI GERMANY FUND (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. These holdings aim to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable to international investors, partly due to limitations on foreign ownership.
The fund’s top stocks are SAP (software), 8.3%; Siemens (engineering conglomerate), 7.5%; Bayer (diversified chemicals), 7.1%; Allianz (insurance), 6.7%; BASF (chemicals), 6.2%; Daimler (automobiles), 4.4%; Deutsche Telekom, 3.8%; Linde AG (industrial gases), 3.4%; Adidas AG, 2.9%; and Deutsche Post, 2.4%. The ETF began trading March 1996. Its MER is 0.48%.
Steady global demand continues to boost Germany’s export-oriented economy. As well, domestic demand is high, led by a rise in retail sales and industrial production. Still, the trade war between China and the U.S., two of Germany’s biggest trade partners, adds uncertainty.
Earlier this year, German Chancellor Angela Merkel resolved the country’s political uncertainty when she successfully formed a coalition government between her Christian Democrat party and the Social Democrats. The “grand coalition” will require her to boost spending, mostly on welfare benefits. However, while that’s a departure from Germany’s traditional fiscal restraint, it should stimulate economic growth.
Recommendation in Canadian Wealth Advisor: iShares MSCI Germany Fund is a buy.
ETFs: Asian markets make up over 60 per cent of the holdings in this fund
ISHARES MSCI EMERGING MARKETS INDEX FUND (New York symbol EEM; buy or sell through brokers) is designed to track the MSCI Emerging Markets Index.
The fund’s geographic breakdown is as follows: China, 31.4%; South Korea, 14.0%; Taiwan, 11.7%; India, 8.8%; South Africa, 6.6%; Brazil, 6.5%; Russia, 3.4%; Mexico, 3.1%; Malaysia, 2.4%; Thailand, 2.3%; Indonesia, 1.9%; and Poland, 1.2%.
Its top stocks are Tencent Holdings (China: Internet), 5.0%; Alibaba Group (China: e-commerce), 4.1 %; Samsung Electronics (South Korea), 3.8%; Taiwan Semiconductor (computer chips), 3.7%; Naspers (South Africa: media and Internet), 2.1%; China Construction Bank, 1.6%; Baidu (China: Internet), 1.3%; Industrial & Commercial Bank of China, 1.0%; China Mobile, 1.0%; and Ping An Insurance Group (China), 0.9%.
iShares launched the ETF on April 7, 2003. Its expense ratio is 0.69%.
Emerging markets are still more volatile and vulnerable to economic downturns than developed nations. But this fund’s broad diversification across many countries tones down that risk.
Recommendation in Canadian Wealth Advisor: iShares MSCI Emerging Markets Index Fund is a buy for aggressive investors.
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Why do you aleays recommend ETFs traded in New York when they have équivalent International ETFs traded in Toronto?
Thanks for your comment! We cover a wide range of both Canadian and U.S. ETFs — and sometimes the U.S. versions have lower fees.