Market Overview

A Rapidly Growing Developed Markets ETF

A Rapidly Growing Developed Markets ETF

Some new exchange-traded funds are well-timed. Others, not so much. To be fair, good timing with new ETFs is often a matter of coincidence, but as the old saying goes, “it's better to be lucky than good.”

In fairness to the iShares Core MSCI International Developed Markets ETF (NYSE: IDEV), the fund has been lucky and good. The luck comes into play when looking at IDEV's debut date. It launched in March 2017, at a time when investors were flocking to ex-U.S. developed markets ETFs in search of better valuations than U.S. stocks were offering.

There's more to the IDEV story than just mere luck.

What To Know

IDEV can be labeled a “good” ETF. It has returned 17.18 percent since inception and is flirting with $919 million in assets under management, a tidy sum for an ETF that's just 13 months old.

IDEV “covers the entire market-cap spectrum of stocks listed in foreign developed markets, making it one of the most diversified portfolios in the foreign large-blend category,” said Morningstar in a recent note. “Stocks listed in foreign developed markets account for roughly 85 percent of the foreign investable market cap, so this fund could easily be used as a core portfolio holding.”

The fund holds nearly 1,270 stocks from more than 15 countries, providing investors with broad-based exposure to developed markets outside the U.S.

Why It's Important

“The combination of extensive coverage and an ultralow expense ratio should make this fund competitive with other comprehensive, foreign developed-market funds like Vanguard FTSE Developed Markets ETF (NYSE: VEA) and the iShares Core MSCI EAFE ETF (NYSE: EFA), which currently both carry Analyst Ratings of Silver,” said Vanguard.

IDEV charges just 0.07 percent per year, or $7 on a $10,000 stake, making it one of the least expensive international equity ETFs on the market.

What's Next

IDEV is up about 1 percent this year. Investors looking for catalysts for the fund should examine stocks in Japan and the U.K. as those countries combine for over 39 percent of IDEV's weight. The ETF's price-to-earnings ratio of 15.30 implies a significant discount to the S&P 500.

Disclosure: The author owns shares of VEA.

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