ETF Update: All-World ETF, Brazil ETF

All-World ETFs: Just Add Water, Instant Diversification

All-world ETFs are the latest industry hot spot, and providers are lining up to launch them.

The two-month-old Barclays fund iShares MSCI ACWI Fund (ACWI) holds 694 stocks from the 2,736-stock underlying index.

Joe Morris for Ignites breaks this down for us as 46% in U.S. and Canadian companies, one quarter devoted to Japan, the United Kingdom, France and Germany, with smaller bits given to emerging markets such as South Korea, Russia, Brazil, China and India.

There are several other ETFs of this type in registration with the Securities and Exchange Commission. Vanguard is planning a Total World Stock index, with share classes for ETF, retail and institutional investors. The fund will track the FTSE All-World Index, which is made up of 2,800 large- and mid-cap companies from 48 countries.

Northern Trust has similar plans for its own such fund, which will track the Dow Jones Wilshire Global stock index.

The appeal of these funds is the automatic diversification around the world they offer without big expenses. The complaint is that they often own the same countries, sectors and stocks, and investors can't pick and choose which stocks they want to own and which they'd rather avoid. But for the investor who just wants to get it done and sit back, these could be an option.

Brazil and Its ETF Reaping Rewards of Natural Resources

Global demand for Brazil's exports are leading to strong economic growth for the country and its related ETF.

Commodities such as iron ore, beef, ethanol, soy and copper are trading close to record levels, and iShares MSCI Brazil Index (EWZ) has given back to investors who've backed this fund.

The country got an assist from Standard & Poor's in April when its debt rating was upgraded to "investment grade." Not bad for a country that was on the brink of bankruptcy six years ago.

Harry Domash for The San Francisco Chronicle reports that this is the only true pure play on the Brazilian economy. The index comprises 71 stocks made up of materials, energy and bank companies. It is up 20.9% year-to-date.

Among the largest companies in the fund and their percentage weightings are:

• Petroleo Brasileiro (PBR) (natural gas), 13%
• Vale (RIO) (metals and mining), 11.4%
• Bradesco and Banco Itau Holding Financeira (banking), 4.4%
• Uniao de Banos Brasileiros (money management), 3.5%
• Companhia Siderurgica Nacional and Gerdau (steel production), 2.7%

Comments

[VSD:]

CVRD is about iron ore and nickel. There is a huge stock of iron ore in China which they are using instead of imports. Most importantly Oil at current levels make importing from Brazil outside of this hemisphere quite uneconomical.

2008 May 28 04:52 PM