Categories: Exchange Traded Funds (ETFs)International Investing

You Can Set Sail with the Biggest Overseas Fund

In the last two weeks, we have discussed SPY and IVV, the two largest exchange-traded funds (ETF), both focused on the U.S. domestic market. The fund featured in this week’s ETF Talk takes an opposite tack with its focus on non-U.S. markets. Today’s ETF is the third-largest ETF on the market and the most popular way to invest overseas: iShares MSCI EAFE ETF (EFA).

This fund tracks the results of an index composed of large- and mid-capitalization developed market equities outside the United States and Canada. As such, it allows investors to allocate to a broad basket of foreign companies.

EFA had a rough 2014 alongside battered global markets, falling 9.33%. However, it has a gain so far in 2015 of 1.43%. The fund manages a total of $53 billion. Its holdings match the index it tracks closely, including weightings. In addition, EFA offers investors a dividend yield of 3.69%, and it has an expense ratio of just 0.33%.

EFA’s holdings fall into a variety of sectors because of its broad, general nature. It allocates the greatest portions of its portfolio to financial services, 25.44%; industrials, 12.58%; and consumer discretionary, 12.46%. EFA has 12.9% of its assets in its largest 10 positions. Among these are Nestlé S.A. (NSRGF), 1.97%; Novartis AG (NVSEF), 1.81%; Roche Holding AG (RHHVF), 1.62%; Toyota Motor Corporation (TOYOF), 1.40%; and HSBC Holdings Plc (HSBC), 1.40%.

For investors interested in a general investment in markets outside of the United States, there are a number of ways to do so, and many investors go with iShares MSCI EAFE ETF (EFA), the biggest ETF player in the overseas market.

Exclusive ETF Talk: Strike Oil While the Market’s Hot!

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week about a giant S&P 500 ETF. I also invite you to comment in the space provided below.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/