Investors can use ETFs to invest in foreign stocks. There are ETFs
that specialize in single countries such as South Africa, China,
Taiwan, India, and Korea. These are country-specific index investments
that are traded on the AMEX. Table 17–2 presents a list of
country ETFs and their trading ticker symbols. These ETFs are
offered by Barclays Global Investors. There are other groups that
offer foreign ETFs such as State Street Global Advisors and the
Vanguard Group’s Vipers.
Each ETF represents a basket of foreign stocks of that particular
country that appeals to investors wanting to invest in that country.
ETFs are purchased like individual stocks through a broker,
discount broker, or online broker. The stocks trade on the AMEX
with the corresponding ticker symbols for each country.
As with closed-end funds, the net asset values (NAVs) are
calculated at the end of each business day. Dividends from investment
income and capital gains realized from the sale of securities
are paid out at least once a year. These payouts would be net of fees
and transaction costs incurred by the country ETFs.
The advantage of investing in foreign ETFs is that they provide
a lower-cost passive approach to investing in the stocks of
specific countries. The goal for each country ETF is to provide the
same performance as that of the particular index of that country.
However, many of these country funds do not have diversified
portfolios because most of their investments are in a few companies.
For example, the South Africa Index Fund had over 20 percent
of its investments in two stocks (13 percent of its investments in
Sasol, Ltd., and 7.8 percent invested in Standard Bank) (Salisbury,
2006, p. B4).
The risks are the same as those outlined earlier in this chapter
for international investing, in addition to the specific risks that
pertain to ETFs. Foreign ETFs might be subject to greater volatility
because of the political and economic risks of the particular foreign
country, in addition to the risks of withholding taxes, imposition of
restrictions on the expatriation of capital, and the lower liquidity
of the stocks. Single-country ETFs are also not considered to be
fully diversified investments because in many countries there is a
concentration of investments in certain industries.
Categories in Trading Mistakes
Lack of Trading Plan
Planning plays a key role in the success or failure of any endeavor
Using too much Leverage
Determining the proper capital requirements for trading is a difficult task
Failure to control Risk
Refusing to employ effective risk control measures can ensure your long-term failure
Lack of Discipline
A lack of discipline can destroy even the most talented and best prepared trader
Useful Advices to Beginning Trader
You can control your success or failure
All about Stocks
Encyclopedia about Stocks. That you should know about Stocks before starting
All terms about Forex market