You Don’t Need to Travel to Profit From International Stocks

You Don’t Need to Travel to Profit From International Stocks


Emerging markets, which contribute about 15 percent of global market value, have higher risks because they often are in smaller economies with less infrastructure and legal and regulatory oversight. They also tend to have a lot of state-controlled companies, in countries like Russia and China.

The iShares MSCI Emerging Markets E.T.F. gained 17.7 for 2019, with top holdings including Alibaba, Taiwan Semiconductor, Tencent, Samsung, and China Construction Bank. Its expenses are 0.67 percent.

Invesco’s FTSE RAFI Emerging Markets E.T.F. was up 16.2 percent for 2019, with top holdings including Taiwan Semiconductor, China Construction Bank, Lukoil and Gazprom. Expenses are 0.5 percent.

If you’d prefer an actively managed fund, Fidelity’s Total Emerging Markets Fund has expenses of 1.14 percent and was up 21.7 percent for 2019, with top holdings Tencent, Samsung Electronics, Taiwan Semiconductor Manufacturing, Alibaba and Meituan Dianping.

People who want to stick to developed economies could look at the Vanguard FTSE Developed Markets E.T.F., which focuses on large companies in the consumer cyclical, financial and industrial sectors. It was up 22 percent for 2019 with a 0.05 percent expenses.

The SPDR Portfolio Developed World ex-US E.T.F., tracking the S&P Developed ex-U.S. BMI Index, is slightly more weighted to financials and industrials. It was up 22.3 percent for the year with expenses of 0.04 percent. And the Schwab International Equity E.T.F., which also focuses on bigger companies, gained 20.9 percent for 2019 with expenses of 0.06 percent.

A final strategy involves E.T.F.s that focus on stable companies that pay dividends. But there are many possible approaches, including funds that focus on developed markets versus those tilted toward emerging markets. Turnover in these various portfolios can be high, Mr. Sotiroff of Morningstar warns, so trading costs are higher.

The Cambria Emerging Shareholder Yield E.T.F. tracks a Cambria index that follows stocks with big payouts. It was up 21.8 percent for 2019, with top holdings Iteq, TransContainer and Zhen Ding Technology Holding. Vanguard has the International High Dividend Yield E.T.F., which gained 18.3 percent for 2019, with top holdings Taiwan Semiconductor, Toyota, HSBC and Royal Dutch Shell.



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