From low-cost emerging market debt to the ultimate contrarian play, here are five more 'overlooked' ETFs you should know about.
Last Friday, I wrote about five "forgotten" ETFs that investors should know about. Here are five more to round out the top 10. (To read the first part of this article, click here.)
Forgotten ETF #5: Vanguard Emerging Markets Government Bond (VWOB)
AUM: $156 million
ER: 0.35 percent
It's hard to call any Vanguard ETF "forgotten." The world's third-largest asset manager, Vanguard manages $2.2 trillion and has a sales force that extends basically everywhere. The media follows its every move.
Yet somehow, the Vanguard Emerging Markets Government Bond ETF (VWOB) escaped my notice. I'll be honest: Until I started researching this article, I didn't know that Vanguard had entered the emerging market debt space.
Emerging markets debt somehow seemed un-Vanguardy. It's a niche market with liquidity issues that should occupy, at best, a small portion of the average portfolio. But Vanguard has embraced international bond exposure in recent years, and this fund is steadily gaining assets. It's easy to explain why.
With an expense ratio of just 0.35 percent, VWOB undercuts the most popular emerging market debt ETF—the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB | B-24)—by 42 percent on fees. EMB charges 0.60 percent in annual fees.
I generally think people get too worked up about expense ratios. Fighting over whether you charge 0.05 or 0.04 percent is silly. But cutting fees from 0.60 to 0.35 percent matters, and it's good to see price competition coming to the emerging market space. This fund deserves to be larger than it is.
For the definitive ETF Analytics Report on VWOB, click here.