Seeking Profits in Calmer Waters

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Exchange-traded funds (ETFs) are a great way to gain exposure to international assets and companies without having to pay big fees or jump through hoops for the privilege of owning foreign securities. This is likely part of the reason international ETFs are popular and can achieve the size of the Vanguard FTSE Developed Markets ETF (VEA), with $48.9 billion under management after a recent influx of funds from investors.

Americans sometimes want to invest outside of the United States to find enhanced returns without taking on the risk inherent in delving into emerging markets. VEA is more focused on markets likely to be familiar to American investors, including Europe, Japan, Australia, South Korea and others, and it targets large-cap stocks.

In keeping with the pattern of funds flowing overseas so far this year, VEA is up 9.58% already in 2015. This performance is a significant improvement from its subpar results in 2014, when U.S. markets were favored by investors. VEA features a 2.88% dividend yield and has an expense ratio of just 0.09%.


The most prominent sectors among this fund’s holdings are financial services, 21.15%; consumer cyclical, 12.47; and industrials, 12.40%. Its highest national allocations are to Japan, 22.6%; the United Kingdom, 18.8%; and Germany and France, 8.7% each. The top 10 holdings in this fund combine to account for 11.24% of its assets.

VEA’s largest individual company holdings include Nestle SA (NSRGF), 1.69%; Novartis AG (NVSEF), 1.62%; Roche Holding AG (RHHVF), 1.36%; Toyota Motor Corp. (TOYOF), 1.3%; and HSBC Holdings (HBCYF.L), 1.15%.

Anyone seeking to invest overseas likely will find an ETF to be the most convenient way to do so. Vanguard FTSE Developed Markets ETF (VEA) is an easy and cheap way to fill that space in your portfolio.

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 mid-cap fund. I also invite you to comment in the space provided below.

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