Broad International ETFs

Broad International ETFs List
(click on symbol for data and articles)

All-World, and All-World Ex-US
iShares MSCI ACWI (All Country World Index) Index Fund ETF (ACWI)
SPDR MSCI ACWI ex-US ETF (CWI)
SPDR S&P International Small Cap ETF (GWX)
The SPDR S&P World ex-US ETF (GWL)
Vanguard All-World Ex-US ETF (VEU)

Multi-Region Developed Market ETFs
BLDRS Developed Markets 100 ADR Index Fund (ADRD)
Claymore/Robeco Developed International Equity ETF (EEN)
Claymore/Robeco Developed World Equity ETF (EEW)
iShares S&P Global 100 Index Fund (IOO)
iShares MSCI EAFE Index Fund (EFA)
iShares MSCI EAFE Small-Cap Index Fund (SCZ)
PowerShares FTSE RAFI Asia-Pacific Ex-Japan Small-Mid Portfolio (PDQ)
PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF)
PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN)
Vanguard Europe Pacific ETF (VEA)

Europe ETFs
BLDRS Europe 100 ADR Index Fund (ADRU)
DJ EURO STOXX 50 ETF (FEZ)
DJ STOXX 50 ETF (FEU)
iShares MSCI EMU Index Fund (EZU)
iShares S&P Europe 350 Index Fund (IEV)
Merrill Lynch Europe 2001 HOLDRs (EKH)
PowerShares FTSE RAFI Europe Portfolio (PEF)
PowerShares FTSE RAFI Europe Small-Mid Portfolio (PWD)
SPDR S&P Emerging Europe ETF (GUR)
Vanguard European ETF (VGK)

Pacific ETFs
Vanguard Pacific ETF (VPL)
iShares MSCI Pacific ex-Japan Index Fund (EPP)

Asia ETFs
BLDRS Asia 50 ADR Index Fund (ADRA)
PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF)
iShares S&P Asia 50 Index Fund (AIA)

"Total" Emerging Markets ETFs
iShares MSCI Emerging Markets Index Fund (EEM)
SPDR S&P Emerging Markets ETF (GMM)
Vanguard Emerging Markets ETF (VWO)

Multi-Region (but not Total) Emerging Markets ETFs
BLDRS Emerging MKTS 50 ADR Index Fund (ADRE)
Claymore/BNY BRIC (Brazil, Russia, India, China) ETF (EEB)

Latin America Regional ETFs
iShares S&P Latin America 40 Index Fund (ILF)
SPDR S&P Emerging Latin America ETF (GML)

Middle East and Africa Regional ETFs
SPDR S&P Emerging Middle East & Africa ETF (GAF)

What Are They?

• Broad and Regional International ETFs cover multiple countries' stocks in a single ETF. Those markets include emerging and developed markets.
• These ETFs are typically based on market-cap weighted indexes, and are therefore dominated by large cap stocks.
• Some of these ETFs track indexes containing only ADRs (American Depository Receipts), ie. foreign stocks that trade on US exchanges. Others track indexes based on foreign stock markets.

Why & How To Use Them

• Foreign stocks are an integral part of any diversified portfolio. The easiest way to include them is with broad-based ETFs.
• A single, All World ETF is the simplest way to build a diversified stock portfolio.
• Emerging markets and developed markets have very different characteristics, so they're different asset classes that are worth including with separate ETFs. Splitting developed and emerging market stocks into separate ETFs may provide you with better rebalancing opportunities.
• Due to their breadth and liquidity, these ETFs tend to be cheaper than single country ETFs, with lower expense ratios and fairly narrow bid-ask spreads. In most cases, their costs are significantly lower than those of foreign stock mutual funds.

What to Look Out For

• ETFs that track indexes containing only ADRs tend to be narrower and less representative of a country's or region's economy than ETFs based on foreign stock markets. ADRs tend also to be large caps only. However, if the US markets have tighter accounting or other standards than the foreign markets, then a basket of ADRs may be safer or may perform better than a broader basket of foreign stocks.
• Foreign stock ETFs tend to have higher expense ratios than US stock ETFs, and the range is wider. So shop around for the lowest expense ratio ETF.
• There are significant differences between these ETFs. While most are traditional market cap weighted index funds, the Claymore, PowerShares and Merrill Lynch HOLDRs are not.
• Merrill Lynch HOLDRs are fixed baskets of stocks that were created for traders to "play" hot asset classes rather than for diversified portfolio construction. Over time they become less and less representative of their asset class, and therefore become less suitable for long term portfolios.
• Vanguard ETFs tend to have extremely low expense ratios and low tracking error (divergence from their benchmarket indexes). But they also have a different structure (see Further Reading below) that might lead to lower tax efficiency for long-term investors.

Further Reading

• On building a portfolio from an All World ETF: BGI's All World ETF Could Fundamentally Change the Way People Invest (Matt Hougan), Total Stock Market ETFs vs. Slice 'n Dice (Murray Coleman), Explore More Core (Roger Nusbaum).
• International ETFs will provide diversification to a US stock portfolio only if foreign stocks have low correlation with US stocks. Geoff Considine discusses this issue in Should You Add International ETFs to Your Portfolio? and other articles.
• For discussion of small cap international ETFs, see Matt Hougan's The Best Smallcap International ETF? That Depends.
• If you are considering splitting your foreign stock exposure into emerging markets and developed markets, see Broad and Regional Developed Market ETFs and Broad and Regional Emerging Market ETFs.
• Helpful articles in understanding the difference between these ETFs include: Matt Hougan's Claymore Takes Quant Investing Global With Two New ETFs and Richard Kang's Vanguard Announces More Cheap International Exposure.
• The PowerShares RAFI ETFs use fundamental indexing. For a discussion of fundamental indexing, see this interview with WisdomTree's Director of Research, Luciano Siracusano.
• Vanguard ETFs are cheap and well managed, but have a different structure from those of other providers. For more discussion of this, see J.D. Steinhilber's VIPERs Provide Lowest-Cost International ETF Alternative and Herb Morgan's The Problem With Vanguard VIPERs ETFs.
• For more information on the choice between broad foreign stock funds and single country funds, see Gary Gordon's International ETFs: Be Aware of Extreme Single Stock Exposure and Broad and Regional Emerging Market ETFs.

This page is part of The Seeking Alpha ETF Selector which sorts ETFs by type, highlights how to use them and what to look out for, and provides links to articles that discuss key issues for investors.

Comments

[David Jackson, SA Founder]

Update: we just added Barclays' iShares MSCI ACWI (All Country World Index) Index Fund ETF (ACWI) to the list.

[David Jackson, SA Founder]

Update: In the Further Reading section, we've added two articles about building a portfolio from an All World ETF:

BGI's All World ETF Could Fundamentally Change the Way People Invest (Matt Hougan)
seekingalpha.com/article/71101-bgi-s-all...

Total Stock Market ETFs vs. Slice 'n Dice (Murray Coleman)
seekingalpha.com/article/71180-total-sto...

[David Jackson, SA Founder]

Update: We've added Roger Nusbaum's short article "Explore More Core" ( seekingalpha.com/article/71235-explore-m... ) to the Further Reading section.

It's short, and asks more questions than it answers, but it touches on a crucial issue: Should you build a portfolio with an All World ETF as the core, supplemented by perhaps one other instrument?