There’s a whole world of ETFs.
When most investors dip into international ETFs, they tend to stick a toe into one of a handful of broad developed market or emerging market funds. Occasionally they’ll jump into a single-country fund that invests in, say, Germany or Japan for safety, or China or India for growth, and that’s as far as it goes. But there’s so much more out there — a whole world, as it turns out.
Guggenheim Frontier Markets ETF (ticker: FRN)
China, Brazil and South Korea are popular emerging markets — economies considered not as mature as those in the U.S., Western Europe and Japan, and thus, more growth potential. Frontier markets are even smaller, less developed markets that have a longer (and potentially greater) growth horizon, but risks include geopolitical instability and less stringent reporting standards. Guggenheim’s FRN invests in stocks from 15 frontier markets (or countries with FM exposure), including double-digit weights in Kuwait, Argentina and Pakistan. Panama-based airline parent Copa Holdings (CPA) and Argentine e-commerce portal Mercadolibre (MELI) each command 5 percent-plus weights in this 87-stock portfolio.
Expenses: 0.7 percent, or $70 annually per $10,000 invested (includes 58-basis-point fee waiver)
Global X Next Emerging & Frontier ETF (EMFM)
For a slightly more stable mix of international exposure that includes both emerging and frontier markets, look to Global X and its suite of more exotic international offerings. The EMFM provides heavy exposure to less developed emerging markets such as Indonesia (10.75 percent), Thailand (10.56 percent) and Mexico (10.13 percent). This fund also makes smaller tactical investments in Argentina, the UAE and Panama, among other frontier markets. The result is a growth-risk blend that falls somewhere between funds like the iShares MSCI Emerging Markets ETF (EEM) and FM funds like Guggenheim’s FRN.
Expenses: 0.56 percent
VanEck Vectors Africa Index ETF (AFK)
Broad international ETFs typically will provide access to most of the world’s continents, but with a few exceptions — typically South Africa — Africa is meagerly represented. Enter VanEck’s AFK, the only broad African equity ETF, though it’s far from perfect. For one, it’s significantly imbalanced, with 30 percent of its funds tied up in South African companies. Also, while it invests in African companies in countries such as Egypt, Morocco and Nigeria, it also can invest in companies headquartered elsewhere but that derive at least 50 percent of revenues from the continent, which leads to heavy weights in the U.K. (11.4 percent), Canada (8.53 percent) and Netherlands (4.36 percent).
Expenses: 0.79 percent (includes 4-basis-point fee waiver)
Global X MSCI Nigeria ETF (NGE)
While South Africa tends to get the lion’s share of attention for Africa stocks, don’t ignore Nigeria, which at 181 million people as of 2015’s count was Africa’s most populous nation by 80 million. A U.N. report says by 2050, Nigeria will boast the world’s third-largest population and surpass the U.S. Although GDP has contracted thanks to low oil prices, Nigeria is working to diversify away from the commodity. Global X’s NGE puts buyers in position to profit from a Nigerian recovery with a 20-stock portfolio heavily invested in Nigerian Breweries PLC (19.48 percent) and Guaranty Trust Bank (14.76 percent).
Expenses: 1.1 percent
VanEck Vectors Indonesia Index ETF (IDX)
Another large population that often goes overlooked is Indonesia, which at 261.1 million is the fourth-most populated country and the 16th largest GDP. Economic expansion is healthy at 5 percent, which has pushed IDX to 13 percent gains this year that are outdoing the Standard & Poor’s 500 index. But experts worry that Indonesia is running out of financial levers to pull after a series of interest rate cuts. Still, a portfolio that’s thick with financial stocks (28.3 percent), as well as consumer plays (17.7 percent staples, 13.1 percent discretionary) is well-designed to benefit from Indonesia’s still ample GDP growth.
Expenses: 0.58 percent (includes 10-basis-point fee waiver)
Global X FTSE Nordic Region ETF (GXF)
There’s nothing complicated about Global X’s GXF: Just four Nordic countries — Sweden (48.78 percent weight), Denmark (28.81 percent), Finland (13.94 percent) and Norway (8.47 percent) — represented by a mere 30 companies. They include a few names familiar to U.S. investors, such as Nokia (NOK) and diabetes care specialist Novo Nordisk (NVO). So, why focus on these countries that typically get second billing in European ETFs? For one, all but Finland have their own currencies, and thus aren’t dependent on the ECB to prop them up. Moreover, all four countries are experiencing various levels of economic recovery in 2017.
Expenses: 0.51 percent
iShares MSCI New Zealand Capped ETF (ENZL)
New Zealand typically sits in the shadow of Australian investments, but this year the kiwis are outshining stocks from down under. ENZL has raced ahead by 18 percent through nearly two-thirds of 2017, outdoing their Australian counterparts by about 8 percentage points. That’s in the face of modest GDP growth this year, though it’s expected to improve to 3.8 percent by 2019 on the back of population growth and a “family incomes package.” ENZL holds a mere 26 stocks, and utilities (18.15 percent) and health care (16.56 percent) enjoy the highest weights, while financials aren’t even present — a sector mix that’s unusual by international ETF standards.
Expenses: 0.48 percent
iShares MSCI Qatar Capped ETF (QAT)
Qatar’s stock market has had to trudge through the mud in 2017, with iShares’ QAT off 10 percent thanks to the Middle Eastern nation’s geopolitical quagmire. In June, Saudi Arabia, Egypt, UAE and Bahrain accused Qatar of supporting terrorism as they severed diplomatic ties and established a transportation blockade of sorts, disrupting (but not derailing) the Qatari economy. QAT, then, is a contrarian play banking on an end to this spat. It’s also one of the most financially overweighted country ETFs on the market, with more than half QAT’s assets dedicated to companies such as Qatar National Bank and Doha-based bank Masraf Al Rayan.
Expenses: 0.64 percent
iShares MSCI Chile Capped ETF (ECH)
Chilean stocks are red-hot once more for what should be a familiar-sounding reason — a belief that political change will unshackle the country’s corporations. Former Chilean president Sebastian Pinera — a business-friendly conservative — is largely expected to win November’s presidential election, and that has driven optimism for most of the year. As a result, iShares’ ECH has sprinted ahead by 21 percent so far this year. This fund is teeming with utilities, which make up a little more than a quarter of the fund, but it’s otherwise fairly balanced, with 18.37 percent in financials, 13.52 percent in materials and 21.35 percent split among consumer discretionary and staples stocks.
Expenses: 0.64 percent
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