The Best Global ETFs for Investing in Offshore Emerging Markets
“So … exactly how many countries is it? I’m confused.”
At Banyan Hill, everybody on the editorial staff gets in on the writing act. That includes our editorial director, Jessica Cohn.
Jess writes introductory notes for new subscribers. That’s what she was doing when I happened to pass her office at our Florida headquarters a couple weeks ago.
“I wanted to say something about your global travels, but I’m confused. Sometimes our copy says you’ve visited over 80 countries. Other times, I’ve seen a figure in the 30s. Which is it?”
I explained that, at last count, I’d set foot in 87 countries.
The lower number refers to an international network of housing organizations in Africa, Asia and Latin America, which I helped launch. It’s currently active in 33 countries.
Whichever way you look at it, I’ve seen a lot of the world.
I’ve also seen a world’s worth of approaches to profit. From ladies picking apart electronics for recyclables on the streets of Mumbai, India, to continental retail and telecoms networks in Africa, I’ve seen lots of business styles out there.
That’s why I can never understand why so many investors act like the United States is the only place to invest profitably. That’s dead wrong.
The World’s Your (Investment) Oyster
On Tuesday, Jeff Yastine made the case for a return to emerging markets.
Jeff’s right. The world’s a big place — physically, culturally and economically.
And there are many places to turn a profit or earn tidy dividend income outside the United States.
Now, 2018 wasn’t a good year for global investing. Emerging markets, in particular, took a knock.
But as Jeff noted, that’s already starting to change. The iShares MSCI Emerging Markets ETF (NYSE: EEM) is up nearly 10% over the last three months. The S&P 500 Index is down 0.02% over the same period.
As Jeff explained, there is every reason to expect that foreign markets will do relatively well this year. As he noted:
It’s starting to look as though Brexit will be delayed, or even rescinded.
China’s stimulus government has just injected an enormous stimulus into that economy.
The U.S. Federal Reserve is dialing back expectations of further interest-rate increases, which will make U.S. investment relatively less attractive.
There’s another factor to consider. The U.S. dollar is poised to decline against major currencies this year. It’s currently 8% overvalued compared to the Swiss franc, for example.
Remember, if you use a strong dollar to buy assets denominated in foreign currencies, and the dollar subsequently declines, the returns on your investments are turbocharged.
The dollar value of your holdings will increase as the foreign currency strengthens. The same is true of any dividends.
Jeff and I agree: All of this makes 2019 a good time to have another look at global markets.
Virtual Investment via ETFs
But many of us are under the impression that it’s difficult or impossible to invest offshore.
It’s hard enough to open and manage a U.S. brokerage account. How much more difficult is it to open one overseas?
It’s true: Many global stocks require an offshore brokerage account.
For example, some of the world’s safest and highest-yielding companies trade on the Swiss stock exchange. And although it’s remarkably easy to access these opportunities, this route isn’t for everyone.
But there’s another way to let your money travel: Use exchange-traded funds (ETFs).
As readers of my Bauman Letter know, numerous ETFs that trade on the U.S. stock market cover foreign assets. My Smart Money system has been profiting from these for years.
Still, identifying specific foreign markets to buy via an ETF requires a lot of knowledge.
Let me make it easy for you and recommend three ETFs that offer excellent value as well as superlative income:
These three ETFs share several features:
- They invest in the world’s top dividend-yielding stocks. It doesn’t matter where they are located. Some are in the U.S., some are in Europe and the Far East, and some are in emerging markets. They cover both established and emerging markets.
- They all have excellent dividend yields. And because they are ETFs, those yields are based on a rotating cast of companies. The fund managers who offer these ETFs can drop individual companies that may face dividend problems and replace them with better ones at any time.
- Their recent price performance is outstanding: around 10% over the last four weeks. The S&P 500 is up only 5.45% over the last month.
It’s a Big World out There
As I’ve gotten older, my rate of international travel has slowed. But my international investments haven’t.
And with more to invest thanks to more time spent at home, my money has begun to travel virtually just as much as I used to physically.
Take it from me: It’s a big world out there, and you owe it to yourself to grab a piece of its profits.
Editor, The Bauman Letter