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Global X ASEAN ETF Review
Investors seeking exposure to emerging markets generally consider broadly diversified exchange-traded funds like Vanguard MSCI Emerging Markets ETF (VWO) or iShares MSCI Emerging Markets ETF (EEM).
What is ASEAN
ASEAN, an acronym for Association of Southeast Asian Nations, is a group of countries seeking to accelerate economic growth through mutual free trade. The association includes Indonesia, Malaysia, the Philippines, Singapore, and Thailand as the founding members along with Brunei, Cambodia, Laos, Myanmar and Vietnam.
Investments in the Global X ASEAN ETF
The Global X ASEAN ETF invests in the 40 largest companies in the founding members of ASEAN. The current weightings for these countries are as follows: Singapore 41.2%, Malaysia 32.8%, Indonesia 14.8%, Thailand 10.6%, and the Philippines 0.6%.
Why invest in Global X ASEAN ETF
Singapore features in the MSCI Developed Markets Index. The other four founding members of ASEAN are among the fastest growing emerging nations, benefiting from foreign direct investments, low labor costs, and strengthening relationship with China. A rapidly expanding affluent middle class, that is estimated to touch 300 million by 2015, is driving demand for a variety of consumer goods and services.
How to invest in Global X ASEAN ETF
The Vanguard MSCI Emerging Markets ETF and the iShares MSCI Emerging Markets ETF invest in a broad range of emerging market countries from Brazil to Turkey. As such, only 6% to 7% of assets are invested in Indonesia, Malaysia, Thailand, and the Philippines, the emerging economies of ASEAN.
Alternative to Global X ASEAN ETF
In lieu of investing in Global X ASEAN ETF, investors can also invest in ETFs specific to individual countries in the FTSE ASEAN 40 Index. They are iShares MSCI Indonesia ETF (EIDO), iShares MSCI Malaysia ETF (EWM), iShares MSCI Philippines ETF (EPHE), iShares MSCI Singapore ETF (EWS), and iShares MSCI Thailand ETF (THD).
Risk of Investing in Global X ASEAN ETF
Over 40% of Global X ASEAN ETF's assets are invested in Singapore and nearly 75% of the ETF's assets are invested in Malaysia and Singapore, posing country concentration risk. Another risk is the dependence of ASEAN countries on China. Like other emerging markets ETFs, Global X ASEAN ETF carries foreign currency, inflation, and political risks.
AlphaProfit ETF Model Portfolios and ETF Investment Newsletter
AlphaProfit's proven ETF selection process enables thousands of investors to thrive in turbulent markets.
The ETF model portfolios use AlphaProfit's proven ValuM investment process for selecting investments. This process has enabled AlphaProfit model portfolios to bag Hulbert Financial's #1 rank numerous times.
The chart above shows the actual performance of the ETF model portfolios since their launch in 2007. The performance shown before 2007 is the performance of AlphaProfit's ValuM investment process selections.
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