Global funds are where we find the ETF industry going to extremes to be all things to all investors.
There isn’t a permutation of investing outside Canada that you can’t cover with exchange-traded funds. There are ETFs that give you the world outside Canada, and that exclude both Canada and the United States while giving you everything else.
Beyond that, you can get funds with and without currency hedging to screen out the impact of fluctuations in the value of the dollar, that add emerging markets to the usual pool of developed countries and that add small and medium stocks to the usual selection of big companies.
Wait, there’s more. As with Canadian and U.S. equity funds, there’s a growing selection of minimum or low volatility funds in the international category. These ETFs hold stocks that have milder ups and downs than the broader market.
This edition of the Globe and Mail ETF Buyer’s Guide focuses on funds that have been around at least three years and preferably five. All are core funds, which means they’re suitable as your one-and-only international or global fund. Global funds cover the world outside Canada, while international means outside North America.
Assets: Shown to give you a sense of how interested other investors are in a fund.
Management expense ratio (MER): The main cost of owning an ETF on a continuing basis; published returns are shown on an after-fee basis.
Trading expense ratio (TER): The cost of trading commissions racked up by the managers of an ETF; add the TER to the MER for a full picture of a fund’s cost.
Yield: An annualized number based on the latest dividend payout.
Distribution frequency: Some international funds pay dividends on a semi-annual basis, which means they’re not ideal for income-seeking investors who want more regular income payments.
Number of holdings: Gives you an indication of whether a fund offers broad stock market coverage, or holds a more concentrated portfolio that may behave differently than benchmark indexes.
Sector weightings: Included to help you verify how well a global or international equity ETF will diversify your Canadian holdings with exposure to sectors such as tech and health care.
Three-year beta: Beta is a measure of volatility that compares funds to a benchmark stock index, which always has a beta of 1.0. A lower beta means less volatility on both the up and down side. Beta offers a chance to see how well low-volatility ETFs deliver.
Inception date: The older an ETF is, the more likely it is that you can look back at a history of returns through good markets and bad.
Note: Market data to March 12. Returns to Feb. 28.
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BMO MSCI EAFE ETF
BMO Low Vol Intl Equity ETF
Ishares MSCI EAFE Index ETF
Ishares Core MSCI EAFE IMI Index ETF
Ishares Edge MSCI Min Vol EAFE ETF
Ishares Core MSCI All Cntry Ex Can ETF
Vanguard FTSE Global All Cap Ex Can ETF
Vanguard FTSE Dev All Cap Na ETF