Best international ETFs to buy in 2022
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Emerging global markets have experienced significant growth in the last decade. In an increasingly globalised world, the majority of international services and products are integral to the global economy. International ETFs offer investors the opportunity to invest in companies worldwide with the best growth potential. This page offers our experts’ pick of the best international ETFs to invest in today.
What are the top international ETFs to buy?
Our analysts have selected five of the top ETFs for this year as displayed in the table below. Continue scrolling down the page to learn more about each.
|#||ETF symbol||ETF name||Where to Trade|
|1||PGJ||Invesco Golden Dragon China ETF|
|2||VPL||Vanguard FTSE Pacific ETF|
|3||FLEE||Franklin FTSE Europe ETF|
|4||EEMX||SPDR MSCI EM Mkts Fossil Fuel Free ETF|
|5||ADRE||Invesco BLDRS Emerging Markets 50 ADR|
1. Invesco Golden Dragon China ETF (NASDAQGM: PGJ)
PGJ is a non-diversified fund that is currently listed at number 3 in the China region. The fund seeks to track the price and yield performance of the NASDAQ Golden Dragon China index. The fund comprises US exchange listed companies that are headquartered and/or have been incorporated in the China region.
The fund focuses on the China region and investors must be cautious of the risks associated with non-diversified funds that solely focus on a single geography – the most significant is specific geographic risk. PGJ attempts to reduce this risk with a large number of holdings and holds 94 company stocks including major Chinese companies: Baidu (BIDU), Alibaba (BABA), Nio (NIO). It must be noted that 62% of the fund’s assets are in its top 10 holdings making them pivotal to fund performance.
The pandemic witnessed a 42% decline in the fund’s performance, this was largely due to the regulatory crackdown on major companies (i.e. Alibaba) by the Chinese government. If interested, you must bear in mind that although China is a hot market with major potential for growth, Chinese regulations can be extremely volatile. It is necessary to do your due diligence and stay on top of the news before and after investing in PGJ.
2. Vanguard FTSE Pacific ETF (NYSEARCA: VPL)
VPL is focused on the Asia Pacific market and tracks the performance of the FTSE Developed Asia Pacific All Cap Index. The fund’s 2,461 holdings are companies that are located in Japan, Australia, Hong Kong, New Zealand, and Singapore. Approximately a fifth of the fund’s net assets are allocated to the fund’s top 10 holdings – considering the large number of holdings, this is a significant allocation and means that the top 10 holdings can impact fund performance.
In the last 3 years, despite the pandemic, the fund has grown by approximately 12%. This demonstrates strength of growth in the Asia Pacific market and the fund’s strategic ability to hedge against specific holding risks. For instance, diversifying across geographies in the Asia Pacific ensures that the fund hedges against country-specific risks (i.e. regulation).
It is further reassuring that VPL is currently ranked number 2 among funds in the diversified Asia Pacific region. A lower than industry-average expense ratio means that the fund also has lower fees than its competitors, a strong cost-reduction incentive for investors. Therefore, if you are a long term investor seeking a passively managed fund, you should consider adding VPL to your portfolio.
3. Franklin FTSE Europe ETF (NYSEARCA: FLEE)
FLEE is a European-focused fund that closely corresponds with the performance of the FTSE Developed Europe Capped Index. The fund provides access to the European market through 591 holdings in mid to large sized companies in 16 European countries.
Despite global economic downturns during the pandemic, the fund has performed exceptionally well with an overall growth of 16% in the last year alone. With lower than industry-average fees, the fund offers a value-add to investors seeking an international ETF that focuses on the European market today.
It must be noted that the majority of the fund’s holdings (22%) are concentrated in the United Kingdom. With ongoing changes in both the pandemic and Brexit regulations in the United Kingdom, new investors to FLEE must stay on top of the news and do their own due diligence to best place their investment.
4. SPDR MSCI EM Mkts Fossil Fuel Free ETF (NYSE: EEMX)
EEMX seeks to align with the performance and yield of the MSCI Emerging Markets ex Fossil Fuels Index. The fund is the first of its kind in offering an ETF that is focused on the core value of fossil fuel reduction by holding global companies that do not own fossil fuel reserves.
A fairly new fund conceived in 2016 and already undergoing a global pandemic, EEMX has grown 7% since its start. An alternative to the traditional investment model for emerging market ETFs, EEMX has 653 holdings of global companies that do not use coal, oil, and/or natural gas reserves for energy. This makes EEMX particularly attractive to climate conscious investors.
It is worth noting that 33% of the fund’s holdings are located in the China region. This means that developments in China can affect fund performance. Given the volatile nature of governmental regulation in China, it is worth staying on top of news and doing your own due diligence to best place your investment in EEMX.
5. Invesco BLDRS Emerging Markets 50 ADR (NASDAQ: ADRE)
ADRE seeks to correspond with the yields of the S&P/ BNY Mellon Emerging 50 ADR Index. The fund is smaller than those discussed above and has 50 holdings across Asia, Latin America, and Africa. It is currently ranked number 1 among Diversified Emerging Market funds.
In the last year, the fund’s growth has declined by 17% but the pandemic is not the sole contributing factor. The fund’s second largest holding is Chinese company, Alibaba (BABA) at 14%, and as mentioned above, Alibaba has been hard hit by governmental regulatory framework in the last year that has dramatically impacted company performance.
Therefore, a new investor should consider that when an ETF has a small number of holdings, it carries more risk. ADRE is prone to both geography and industry risk as it is a non-diversified fund. When placing your investment, you must have a large risk appetite and be able to budget according to what you are prepared to lose.
Where to buy the best international ETFs
You must register with an online broker in order to get an ETF. ETFs are like individual stocks, so you can buy or sell them as you wish. The table below features our selection of the best brokers that offer international ETFs.
What is an international ETF?
For the purpose of this page, it is an Exchange Traded Fund that focuses on stocks of companies located in countries other than the United States and the United Kingdom. This page has predominantly focused on ETFs with holdings in emerging markets (i.e. Asia, Africa) and Europe.
Foreign markets are hubs for trade and growth. Global companies are growing, and there is scope for mature returns over the long term. Therefore, investors can tap into great value-adds for their portfolio by investing in international ETFs.
Are international ETFs a good investment?
With increasing globalisation and the pace of growth in emerging markets, we live in the era of the global economy. We are increasingly more reliant on national economies for trade and development across sectors.
International companies often not only have proven track records, but they also offer long term investors with a degree of speculative growth that is reassuring for their investment. Growth investors can gain exposure to unpredictable returns by investing in international ETFs and here are the best platforms to do so.
High reward is often correlated with high risk, and consequently you must do your own due diligence. It is key to stay up to date with the latest news and developments in order to best place an investment, you can do so by following the links below.
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