Malaysia – Terima Kasih !!

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“Terima Kasih” means “Thank you” in Malay language.

iShares has the EWM ETF for Malaysia. It has assets of just over $1B and is up over 30% YTD this year – a fantastic performance when compared to the US markets.

Not many stocks of Malaysian firms trade in the US.However Malaysia is a stable, high growth developing country. More detailed research on Malaysia will be posted here in a week or two.

Photo: Petronas Twin Towers in Kuala Lumpur (KL), Malaysia.
Petronas is the state-owned national oil company of Malaysia.No wonder they were able to build this awesome skyscraper.:-)

– David

ETFs for covering Europe countrywise

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One of the best ways to gain exposure to different countries in Europe is by using the Exchange Traded Funds (ETFs) for each country. iShares has 11 country based ETFs for Western Europe. These are called the iShares MSCI Series.

Out of these 11 ETFs, 9 ETFs have more than 50% of the portfolio assets in just the top 10 stocks in the portfolio. So these funds are heavily concentrated in a small number of stocks in each market. The only two funds that have less then 50% of the portfolio assets in the top 10 stocks are the iShares UK ETF – EWU and the iShares EMU Index Fund – EZU.

Among the 11 ETFs, the following have about 40-50% in Financials. While this may be a good thing for wonderful dividends and stability, it does have some risk due to the current market conditions on financials:

1. iShares Belgium ETF – EWK
2. iShares Italy ETF – EWI
3. iShares Netherlands ETF – EWN
4. iShares Spain ETF – EWP

The Austria ETF – EWO, EWP and Sweden ETF – EWD have had a average annual return of over 20% for the past 5 years. All the other ETFs have returned an average of above 10% but below 20%.

All these ETFs have a good portion of their assets invested in financials.

iShares UK ETF – EWU and ishares Germany ETF – EWG have assets of over $1B+ whereas the European Monetary Union (EMU) ETF – EMU has over nearly $3B in assets. The smallest of these ETFs is the Belgium ETF – EWK with assets of around $150M.

There are many other ETFs in the market such as those from ProShares, WisdomTree, Vanguard etc. But iShares is the market leader and is known for their innovative products such these country wise ETFs.

The other ETFs are iShares Switzerland – EWL and the ishares France fund – EWQ. Out of all these funds EWL had the least average return for the past five years.

iShares charges an expense ratio of about 0.50% on average for these funds.So if you are investor that wants exposure to European markets but do not want to take the mutual fund route, then pick up a few of these country-wise ETFs from iShares. You won’t be disappointed !!

Chile ADR Stocks !!!

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Chile is a country known the world over for its grapes and of commodities specifically copper. She is one of the biggest exporters of copper. Other export include fruits, nuts, forestry products and seafood.

There are quite a few opportunities for investors looking to investor in this South American country. There are many ways to invest there for US investors.

One possible option is to invest via the new ishares Chilean ETF that was launched last month. The ticker for this ETF is ECH. So far the fund seems to have collected some $9.8M.

Another way to invest in Chile is thru the closed-end fund called The Chile Fund.
The symbol for this one is : CH
This fund has a respectable $220M in assets and its performance over 5 years has been good.

If you prefer to pick up a few Chilean stocks for your portfolio, here are some choices:

1. Bank of Chile – BCH

2. Lan Airlines – LFL

3. Corpbanca – BCA

4. Banco SAntander Chile – SAN

5.Chemical & Mining Co. of Chile Inc. – SQM

6. Administradora de Fondos de Pensiones Provida SA – PVD

All these stocks pay decent dividends and will definitely be a quality addition to your portfolio. Remember if you are not sure which one to pick out of these, just pick up a few ETF shares while it is cheap or some shares of The Chile Fund. You will not be disappointed by investing in Chile.

Until next time Cheers to the folks in Santiago, Chile. And don’t forget to eat lots of Chilean grapes the next time you shop at the grocery store.:-)

-David.
www.topforeignstocks.com

The Mystique of Mutual Funds – Part II

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What are the fees I need to pay in a mutual fund?
Front-End Load – Fees charged upfront when you invest.Anywhere from 0% to 7% max.
Back-End Load – Fees charged when you exit a fund. Also called as deferred sales charge.

Are there funds where there is no loads?.
Of course. No-Load funds do exist. These funds do not charge any fees. Most people prefer
the no load funds from the Vanguard group.

Are there other fees I need to pay in a mutual fund?
Well there are other fees like 12b-1 fees for marketing expenses and operating expenses for the fund called the expense ratio. These fees are deducted automatically from the fund and you will not need to pay them separately.

For what stocks do I need a mutual funds?
It depends on the type of investor. For most people any type of mutual fund is a necessary. It can large-cap, small-cap or mi-cap. However if you are a professional investors, then mutual funds are the way to go for small caps. It is very difficult to research and invest on your own in small cap stocks. Fund managers have easy access to lots of information and can be the trust to monitor the investment in small stocks.

Are the mutual funds regulated?
Yes. They are heavily regulated. A mutual fund has to mail you statements and annual reports as well. Some do half-yearly reports.

What are the disadvantages of these funds?.
There are some problems with investing in MFs. The loads,expense ratio etc. can eat away a good portion of your returns over the long term like 5-10 years. Other issues are that you may get adversely affected due to other funded holders’ actions, inability to make any stock selections, inability to sell profit and losses whenever needed and unable to sell anytime when the markets are open at the current price.

Cheers!!!
-David
www.topforeignstocks.com

The Mystique of Mutual Funds

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What are mutual funds?
A mutual fund is a pool of many investors’ money. This idea started becoming popular in the 1970s and have now become the favorite tool for many investors. By pooling and investing together, you reduce the risk.

What are the type of mutual funds?
There are two types of funds. They are open-ended and closed mutual funds. In an open-ended fund, the fund will be open to new investors all the time and the fundhouse will redeem units upon request by exist unit holder. In a closed-end fund, new units are not issued. A fixed amount of units are issued when the fund is opened and then the fund is closed to new investors. However existing unit holders can trade their unit son the market with one another.

How does a mutual fund work?
A mutual with say $100M will buy 100 stocks each for $1M. So the portfolio will now contain 100 stocks. The fundhouse or the Asset Management Company which manages the fund may issue 1 Million units. Then the Net Asset Value (NAV) of this fund will be calculated by determining the market value of all the stocks in the fund and then dividing that by the number of units of 1 M. This will give the NAV price for each unit of the fund.

What are some good mutual funds in the US?
1.www.vanguard.com
2. www.americanfunds.com
3. www.wanger.com

There are many other thousands of funds to choose from.

What are some best international small cap funds?
1. Wanger International Small Cap Adv (WSCAX)

2. Columbia Acorn International Select A (LAFAX)

More on mutual funds tomorrow.

Cheers!
-David