I have set up and am slowly buying in small amounts a small portfolio of ETFs abroad.
I thought a lot about it and maybe it would be bad to run a small portfolio abroad, but I do not think so, ETFs are not like companies that change a lot, they suffer a lot with legislation, they have a lot of news every day, they are much less volatile and a lot More diversified in assets and in different markets and sectors. We have to change the mentality a bit when it comes to buying ETF because it is a very different asset from a normal company stock.
To tell you the truth, analyzing an ETF seems to me to be simpler than analyzing a company because when you are going to analyze an ETF you will compare it with other ETFs and other markets. The good thing is, they take a bit of simplicity in the purchase.
CPXJ picks up the developed markets of the Pacific region except for Japan, is more concentrated in Australia, Hong Kong, Singapore and New Zealand. He is a bit drawn to the financial sector and concentrated in Australian banks.
From the little that I know of the countries:
Australia has 25 years of GDP growth (no crisis), good quality of life, growing population, highly educated, full employment, sound economics and politics, economic freedom to undertake and negotiate. Hong Kong and Singapore are smaller and more volatile markets that are very concentrated in the financial sector but have laws that work, economic freedom, high per capita income, low taxes for companies and seem to be organized countries.
See that there is no way to complicate the analysis of an ETF so much that you find it all on this page:
It follows the MSCI Pacific ex-Japan index, is cumulative, sold in US dollars, does not pay dividends, has a rate of 0.2% a, a and is based in Ireland. To buy it in the IB broker code I think it was CSPXJ.
ISIN code: IE00B52MJY50
The ETF is currently in a P / E (our PL) of 15.26 and a P / B of 1.54.
The CAPE Australia is 16.1, 15.8 Hong Kong, Singapore and New Zealand 11.4 22.
The ETF CAPE does not show directly but only calculate the average of the weighted sums of countries and divide. As Australia has 60% of the ETF’s weight, it will have 60% of the Australian CAPE’s weight too and so on.
Let’s see by weights, sectors, and returns as the ETF walks.
I like seeing the cumulative return more than the discrete one because it gives a better idea of how the ETF behaved.
In the top 10 stocks by weight of ETF allocation we have:
Look at BHP Billiton up there, this is one of the biggest mining companies in the world (unfortunately the same one from Mariana’s tragedy), I think together with Rio Tinto and Vale these should be the three largest. Australia’s economy is very dependent on commodities as well as Brazil’s.
The biggest one is the Commonwealth bank of Australia and then the Westpac.
Another giant is the AIA group.
See the first paragraph of the AIA group in Wikipedia:
AIA Group Limited  known the AIA ( Chinese: 友邦保險控股有限公司 ) is the largest independent public listed pan-Asian life insurance, group. It has a presence in 18 markets in Asia-Pacific, wholly owned branches and subsidiaries in Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei, 97% subsidiary in Sri Lanka, 26% joint venture in India, and representative offices in Myanmar and Cambodia.
When I do not know some companies ETF I give a researched to know at least what it is, but not to the point of release go read or go searching the stock itself.
When buying an ETF you have to know that you are taking the actions of all these companies together and of course, with the advantages and disadvantages that this entails, you can not win at all. What makes you buy the ETF is SUPPORT that the overall sum is going to be positive, even though you know that there are bad companies inside too, you have to accept that, if you were to buy only a good company, you only had to buy one by one and go to stock Picking that was already discussed here in the last post.
You can also search the page for this asset on the MorningStar page:
For those who like to see the annualized return here is the table of MorningStar:
See the third row for the index since 2006 (since the ETF only started in 2011). And that beautiful recovered in the post crisis of 2008! In the last line, the YTD means (from the beginning of the year to here, type from January 1st until the day you go to see the table, in the case today until December 16).
One last important thing is the size of the portfolio companies, you can see that in the “portfolio” tab on MorningStar:
We have 63% of giant companies, 30% large and 5.77% medium.
Note that a “medium” company of these must already be larger than most of the large companies of bovespa and a single giant company must be bigger than the value of the whole bovespa.
The sum of the DY gives 5.53% that when buying the ETF we will not receive, ishares itself will reinvest the values automatically buying more shares and thus increasing the number of shares of the fund. See here it has nothing to do with the US and not with that 30 % that the US charges the NRA. This investment is not in the US, only the broker is in the US, and the US can not tax you for buying in assets based in other countries. To tell you the truth I do not know how much of these dividends will actually be taxed because they are in many countries, but in BlackRocks annual report they put it, and it is well below 15%.
Basically this is how I did it personally, first a macro analysis of the markets and countries involved (I did not put it here, it’s one more thing to world knowledge and varied readings), then an MSCI index analysis in historical time and then a Page of the asset in the ishares and also in the morningstar. Believe that in 20 minutes you can do all this and compare the ETF with others available out there.
What made me like this ETF more is the high Australian weight in it, and also the willingness to invest in Singapore and HK that are civilized, dollarized, robust markets with good human, the political and economic capital.
In my international portfolio I bought and posted here:
Berkshire Hathaway (64 companies)
CSPXJ (150 companies)
NOT A PURCHASE RECOMMENDATION.