Diversification with Global ETFs

Global ETFsOne of the unique advantages of ETFs is that you can get instant diversification with one trade. This is especially true for Global ETFs which offer the promise of quick geographic exposure.

State Streets’ SPDR® DJ Global Titans ETF (DGT) tracks the world’s 50 largest stocks by market capitalization. One watch out for those looking to diversify a Western-focused portfolio is the ETF’s concentration in U.S. and U.K. based companies (60% and 15% respectively as of 2.20.08). Read more at State Street’s website.

Barclay’s iShares S&P Global 100 Index ETF (IOO) tracks 100 companies with a market cap above $5 billion that have at least one international facility. Like Global Titans, the IOO approach results in heavy concentration in companies headquartered in the U.S. and U.K. (47% and 14% respectively as of 12.31.07). Read more at iShares website.

WisdomTree’s International Dividend Top 100 Index (DOO) takes a different approach on a couple of dimensions. First, it excludes U.S. based companies – the result is a portfolio without significant concentration in any one country. Second, WisdomTree weights the portfolio using dividend-yield, the ratio of a company’s annualized dividend to its stock price. One benefit of that approach is the portfolio’s overall dividend-yield – a generous 5.18% as of February 20, 2008. Read more at WisdomTree’s website.

We’ve only covered the tip of the iceberg when it comes to Global ETFs. To receive a copy of our upcoming in-depth report Global ETF Investing, please subscribe to our e-mail list.

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