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A Cheap International ETF And Its Epic Growth Spurt

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A Cheap International ETF And Its Epic Growth Spurt
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There is no denying investors' thirst for international exchange traded funds in 2017. As the U.S. bull market ages, 

investors are are flocking to low-fee ex-U.S. ETFs in search of new frontiers for potential upside.

Five of this year's top 10 asset-gathering ETFs are funds dedicated to international equities, both developed and emerging markets. One of the leaders of that quintet is the Vanguard FTSE Developed Markets ETF (NYSE: VEA).

VEA enters Friday, the last trading day of 2017, with a year-to-date gain of 26 percent compared to about 22 percent for the S&P 500. The Vanguard developed markets ETF has been only slightly more volatile than the benchmark U.S. equity gauge this year, implying superior risk-adjusted returns.

Broader Opportunity

Investors have long-standing biases to equities in their home markets, but international diversification can help bolster long-term returns.

You get a broader opportunity set outside of just U.S. stocks,” said Morningstar. “You have to remember here, 50 percent of the global market cap is really overseas right now. There's a much bigger opportunity set that investors can take advantage of, many, many more companies overseas than there are in the U.S. Those are really, kind of, the two big diversification advantages you can get from international stocks.”

VEA does provide diversification benefits. The ETF holds over 2,800 stocks from 23 countries. VEA follows the FTSE Developed All Cap ex-U.S. Index. That index provider includes Canada and South Korea in the index, but those countries are excluded from the rival MSCI EAFE Index. Canada and South Korea combine for almost 13 percent of VEA's geographic exposure.

Plenty Of Fans

Year-to-date, VEA has added $17.4 billion in new assets, a total exceeded by just two other U.S.-listed ETFs. In every quarter this year, VEA has been among the top 10 asset-gathering ETFs. An annual fee of just 0.07 percent, or $7 on a $10,000 investment, is a big reason why. That makes VEA cheaper than 93 percent of competing funds

Home to $68.2 billion in assets under management, VEA garners a four-star rating from Morningstar.

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Todd Shriber owns shares of VEA.

Posted-In: FTSE morningstarLong Ideas News Specialty ETFs Markets Trading Ideas ETFs Best of Benzinga

 

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