Diversification comes with its own risks
Sometimes a more focused approach can be more advantageous.
By Jim Lowell, Forbes ETF Advisor
Overall, I think the international markets may recover...not a bold claim. But that if they do, I don't think such favor will be universal and equal.
That means that I don't like buying whole established international marketplace ETFs as if their risks and returns are created equal, as much as I like more selectively constructed and concentrated foreign stock ETFs. If a rising tide lifts all boats, I'd expect the more selective and concentrated international ETFs to rise faster and higher than the average broad-based international ETF.
Therefore, buy BLDRS Developed Markets 100 ADR (ADRD). This ETF's benchmark is the BNY Mellon Developed Markets 100 ADR Index, which is made up of approximately 100 developed market-based depository receipts. The focus is mega-cap; and mega-caps derive some defense form generating revenue beyond their country and zone's pale.
The top five country representations are the U.K. (38.5%), Japan (15.2%), Switzerland (9.7%), France (6.9%), and Germany (5.3%). The top three sectors are financials (24.2%), health care (16.7%), and energy (13.8%). Top holdings include HSBC Holdings (HBC), Novartis (NVS), and Toyota Motor (TM).
Also, buy iShares MSCI EAFE Small Cap (SCZ). The MSCI EAFE Small Cap Index is made up of the small-cap stocks from the MSCI EAFE Index.
The top five country representations are Japan (27.8%), UK (21.8%), Australia (7.2%), Germany (6.3%), and Switzerland (3.7%). The top three sectors are industrials (21.5%), financials (20.5%), and consumer discretionary (19%). I like the resilience of consumer over and against the ravages of governments.
Finally, buy SPDR Global Dow (DGT). DGT seeks investment results that correspond to the price and yield performance of The Global Dow Index, which is made up of 150 companies from around the globe chosen by an Averages Committee made up of the managing editor of The Wall Street Journal, head of Dow Jones Indexes research, and head of CME Group research.
Companies are chosen based on size, reputation, and potential for growth. It began trading in September 2000, and has a market value of $100 million.
The top five country representations are the U.S. (43.2%), Japan (11.7%), U.K. (6.7%), France (6.4%), and Switzerland (4.5%). The top three sectors are financials (18.8%), industrials (14.3%), and consumer discretionary (13.2%). Top holdings include Vestas Wind Systems, Gilead Sciences (GILD), and UBS AG (UBS).
Subscribe to Forbes ETF Advisor.
More from The MoneyShow
- Get in on the Next Housing Boom
- Toyota Remains in the Driver's Seat
- Profit Around the World with ETFs
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
An interest rate tease in The Wall Street Journal sends the market into an optimistic tizzy -- but one that doesn't end quite at the top.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.