7 New ETFs for International Exposure

Focus: ETFs

Market-cap weighted international ETFs may not be in investors’ best interest, says First Trust’s Ryan Issakainen, who explains how his firm’s new products can give them more targeted country exposure.

Kate Stalter: Today, I’m speaking with Ryan Issakainen. He’s an ETF strategist at First Trust. Ryan, I understand that you have some insights into why investors should be looking at global markets these days.

Ryan Issakainen: Absolutely. I think one of the most important reasons why investors need to consider markets outside the US is, simply put, if you look at economic output, the US represents only about 19% or 20% of world GDP. So there’s opportunity overseas, and most investors, at least in the US, are by far underweight in international equities.

Kate Stalter: You just rolled out some new ETFs. Tell us about the focus of these, and what the objectives are.

Ryan Issakainen: Yeah, these are funds that are focused on individual countries, and it allows investors to get a little bit more targeted exposure if they want to, say, avoid countries and economies that are doing a lot of business with some of the European countries that are in some financial turmoil right now, and really want to focus on maybe some of the stronger countries in Europe, like Germany or Switzerland.

We thought there was a big opportunity in the international space, especially with specific countries, because a lot of the existing ETFs that focus on individual countries are market cap-weighted. The result of market cap weighting, when you’re looking at individual countries, is oftentimes a very top-heavy concentration in just a few holdings.

For example, one of the countries we like in the emerging markets is Brazil.