Most people tend to invest in domestic securities. U.S Bonds, local stocks, domestic indexes, etc. However, there is a great big world of global investments that could be the perfect fit for your portfolio. And what better way to gain exposure to these markets than with foreign ETFs. All the benefits of ETFs in one investment vehicle.
If your goal is to hedge risk, capitalize on opportunities, or diversify, foreign ETFs can be the way to go. But which type of foreign ETF is right for your investing strategy? That’s for you to decide, but to help you with your research, here are 13 types of foreign ETFs to consider.
1. Broad-Based Foreign ETFs
If you’re looking for overall global exposure or to diversify with some out-of-country investing, a broad foreign ETF might be the first place to look.
Certain ETFs like DGT – the SPDR Global Titans ETF – track multiple countries for your foreign investing pleasure. The securities in this SPDR all have a strong international presence and therefore give your portfolio international exposure. Some of its holdings include companies like MicroSoft (MSFT) and Johnson and Johnson (JNJ) and cover multiple industries like finance, health care, and energy.
2. Emerging Market ETFs
Consider a country or even countries that have upside potential. The way to play these regions might be an emerging market ETF. A great way to gain exposure to an up-and-coming area while at the same time, reaping the advantages of foreign ETFs.
An example of an emerging market ETF would be ADRE – the BLDRS Emerging Markets 50 ADR Index ETF. This fund invests in companies like Teva Pharmaceuticals (TEVA) and China Life Insurance (LFC), which are heavily involved in emerging market countries like Brazil, China, Taiwan, Hong Kong, and South Korea.
To see more emerging market funds, look no further than our list of emerging market ETFs.
3. Developed Country ETFs
On the flip side of emerging markets are developed markets. If you’re looking for a safer global asset, a developed nation ETF might be the better fit. For example, an ETF like PDN – the PowerShares FTSE RAFI Developed Markets ex-US Small / Mid ETF consists of securities in developed countries like those in Europe.
4. BRIC ETFs
BRIC ETFs consist of securities in four countries. Brazil, Russia, India, and China. Therefore if you wanted an investment that collectively captures these four regions look no further than a BRIC ETF like EEB – the Claymore / BNY Mellon BRIC ETF.
5. Regional ETFs
As with a BRIC ETF, you may want to invest in a certain collection of countries as opposed to one single country. That’s where a regional ETF comes in to play. Whether it’s a European ETF, an Asian ETF, or a Latin ETF like ILF - iShares S&P Latin America 40 Index ETF, there are ETFs for most of your favorite regions.
6. Individual Country ETFs
However, if you do have an interest in gaining exposure to a certain country like Peru, India, or Canada, an individual country ETF could be the fund of choice. For example, if you wanted to invest in China, then you could select an ETF like FXI - iShares FTSE/Xinhua China 25 Index ETF, which consists of companies whose revenues are generated in China.
To see more China funds, look no further than our list of China ETFs.
7. Foreign Currency ETFs
Here is where some of the fun begins. Instead of playing the stocks in certain countries, some investors feel a country’s currency is a more accurate measure of the economy. In that case a foreign currency ETF could be the fund for you.
For example, consider a currency fund like FXA – the CurrencyShares Australian Dollar Trust. Perfect for those wanting to play the currency markets down under.
So if you have a thirst for currency funds, look no further than our full list of foreign currency ETFs.
8. International Bond ETFs
Like currencies, bonds are another way to invest in foreign markets. So an international bond ETF could be some ammunition in your investing arsenal. A great way to increase your global exposure while at the same time creating a revenue stream in your portfolio.
If you are interested in foreign bond funds like BWX – the SPDR Barclays Capital International Treasury Bond ETF, then look no further than our complete list of international bond ETFs.
9. Foreign Style ETFs
Like currency and bond ETFs, there are many other ETF investment strategies to utilize with foreign investing. Once such strategy is to invest by style. Whether you like mid-cap, large-cap, or small-cap investments, or even value, growth, or blend, there’s a foreign style ETF for you.
For example, for those investors who prefer small-cap assets, consider SCZ – the iShares MSCI EAFE Small Cap Index ETF. And if that isn’t enough, there is also…
10. Foreign Dividend ETFs
Like with international bond ETFs, some investors like revenue streams in their portfolios and tend to favor securities with dividends. There are foreign ETFs for those investors as well. ETFs like DND – the WisdomTree Pacific ex-Japan Total Dividend ETF, which consist of dividend-paying holdings like the Commonwealth Bank of Australia.