Understanding Risks Of Single-Country ETFs

June 12, 2012


Single-country funds like the iShares MSCI New Zealand Investable Market Index Fund (NYSEArca: ENZL) may be attracting attention due to their relatively high yields, but investors interested in using them need to consider other factors, according to an article on The Street.

Specifically, investors need to take measure of a country’s fiscal condition, its future prospects as well as the holdings of the ETFs themselves, according to Roger Nusbaum, contributor to the Street article.

Regarding holdings, investors need to be mindful of too much exposure to one sector, as many single-country funds have heavy weightings in a country’s financials. The iShares MSCI Singapore Index Fund (NYSEArca: EWS) and the iShares MSCI Poland Investable Market Index Fund (NYSEArca: EPOL) allocate 45 and 40 percent toward the sector, respectively, the article said.

WisdomTree’s Australia Dividend Fund (NYSEArca: AUSE) was outlined as an example of a good fund in comparison with the iShares MSCI Australia Index Fund (NYSEArca: EWA), as it has a yield of 7.73 percent compared with EWA’s 5.23 percent.

Visit TheStreet.com to read the full story.

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