The Global ETF

Global ETFs are based on stocks or bonds, and other securities, from all parts of the world that make up a global index. This also includes commodities such as oil, gas, precious metals and others. Global ETFs are often referred to as international ETFs but global also includes U.S. domestic securities. This inclusion broadens the type of securities that can be included and provides an investor with a more diversified investment.

Exchange Traded Funds

Exchange trade funds (ETFs) are funds that are based on the performance of an underlying index of securities. Such a fund is a passively managed investment that is similar to a mutual fund in that it requires a small amount of capital in order to purchase. The fund however differs from a mutual fund as mutual funds are actively managed and have higher management fees and charges. ETFs mimic the performance of the underlying index and not necessarily outperform it while mutual funds returns are based primarily on outperforming the market.

ETFs are generally traded on the NASDAQ trading system, which is the over the counter market. This trading provides investors of all types with greater access and information regarding the performance of the different global ETFs that are available.

What Constitutes a Global ETF?

Global ETFs are constituted by those securities indices in all countries including the developed first and second tier economies such as the United States, Western Europe and the European Union, China and Australia. They also include securities indexes for emerging countries like Brazil, India, Venezuela and Russia. The indices that can make up a global ETF can be for stocks, bonds, commodities or a blend of all of these assets classes. The purpose of the global ETF is based on its investment strategy and mix of indices necessary to achieve that strategy.

Why Choose a Global ETF?

Choosing a global ETF over an international or other type of ETFs provides you as an investor with some exposure of the performance potential from international indices with some grounding in the U.S. Although ETFs are not actually invested in the securities of the underlying index they provide a good mirror for the performance of these securities in their respective markets. This helps provide some geographical diversification and reduce some of the risk that may come from keeping all of your investment assets in one country such as the United States.

How to Choose a Global ETF

If you are considering a global ETF to invest in the best place to start is by creating a financial plan that is based on your investment objectives and goals as well as your tolerance for risk. This plan serves as the blueprint to use in selecting a global ETF that will best help you match the global ETF investment that fits into your plans. This should be the way you approach choosing a global ETF as it helps remove some of the emotional aspect of investing and from making a decision based solely on performance.