Global diversity in your investment portfolio can be accomplished in one of two ways: by buying individual stocks or individual jurisdictional ETFs, or by buying global ETFs that give you exposure to most (if not all) of the major worldwide jurisdictions. One such ETF that I'd like to discuss that could give this global diversification is the iShares MSCI World ETF (NYSEARCA:URTH).
URTH has $25.1M in total net assets under management and an expense ratio of 24 basis points. The fund currently invests in 1,188 equities with 0.10% in cash. URTH has a 1.86% dividend yield which pays twice a year- in June and in December.
The sector breakdown is as follows: financials (20.72%); consumer discretionary (11.95%); information technology (11.65%); healthcare (11.37%); industrials (10.92%); consumer staples (10.57%); energy (9.59%); materials (5.77%); telecommunications (3.74%); utilities (3.35%); and other (0.38%).
Top Ten Geographies
URTH provides exposure to the developed markets in the world in a single fund. The top ten geographies of URTH accounts for 93.21% of the fund and is broken down as follows:
United States - 53.69%
Japan - 9.34%
United Kingdom - 8.75%
Canada - 4.18%
Switzerland - 4.12%
France - 3.62%
Germany - 3.53%
Australia - 3.31%
Sweden - 1.35%
Netherlands - 1.32%
Top Ten Holdings
These top ten holdings of this ETF account for 9.38% of net assets. The breakdown is as follows:
Exxon Mobil Corp. (NYSE:XOM) - 1.44%
Apple Inc. (NASDAQ:AAPL) - 1.38%
Microsoft Corp. (NASDAQ:MSFT) - 0.96%
Google Inc. (NASDAQ:GOOG) - 0.86%
Johnson & Johnson (NYSE:JNJ) - 0.84%
General Electric Company (NYSE:GE) - 0.84%
Chevron Corp. (NYSE:CVX) - 0.82%
Nestle (OTCPK:NSRGY) - 0.75%
Procter & Gamble Company (NYSE:PG) - 0.74%
Wells Fargo & Company (NYSE:WFC) - 0.73%
URTH Performance & Fundamentals
One year: 18.80%
Since inception (1/10/2012): 15.30%
52 week range: 49.77-66.12
Price-to-Earnings ratio of 21.18
Price-to-Book ratio of 3.39
Beta vs S&P 500 of 0.86
Though URTH provides exposure to the developed markets, there is an overwhelming disproportional weighting on the United States over the remaining jurisdictions. I have a concern about that because while we know that the U.S. economy is on the road to recovery, it is possible that the U.S. economy tanks - heaven forbid. If the weighting were distributed a bit more into the other jurisdictions, should other jurisdictions' economies do well, that would benefit URTH and investors who are in this name.
I do like the sector breakdown of URTH. Other ETFs that I have discovered in previous articles had a much larger weighting in the financial sector. I don't like the excessive weighting in the financial sector because like any other sector, the financial sector has its own susceptibilities and chances of getting hit with an event or a downgrade that could send financials tumbling. In this case, that risk is minimized.
Looking at the performance and fundamentals, URTH is currently trading about 3% off of its 52-week high, so I'd like to wait for a pullback to about 62 per share before buying considering buying in. I like the fund's performance but advise that if you're going to buy into URTH, then you keep an eye on what's going on in the U.S. economy.
Overall, I think URTH is a good play if you want to weigh heavily on the U.S. economy with a small worldwide exposure. Given the concerns I had about this ETF, however, I wouldn't make this position weigh too heavily in my portfolio.