ETFs that own many stocks, which are all based in one country, can be very valuable for American investors. That’s because these ETFs, known as country ETFs, allow American retail investors to benefit from a nation’s economic strength without having to intensively evaluate the outlook of individual companies based there. Moreover, it can be difficult for American retail investors to buy many, if not most, of the best stocks whose issuing companies are based in foreign countries. For example, when I was looking for an individual Indian stock to recommend recently due to the country’s rapid economic growth and bright future, I realized that there were very few India-based equities trading in the U.S. So, for investors who want broad-based exposure to countries with great outlooks, here are three best country ETFs to buy.
iShares MSCI India ETF (INDA)
The iShares MSCI India ETF (BATS:INDA) has total net assets of $7.9 billion, and all of its funds are invested in Indian stocks.
Regarding sectors, the ETF’s stock holdings are very diversified, with Financials, Consumer Goods, Industrials, and Technology making up 25%, 15%, 14%, and 13% of its holdings, respectively.
As for the Indian economy, The Economist recently noted that “India appears to be booming.” Indeed, the nation’s GDP surged 7.6% in the 12 months that terminated at the end of the third quarter, and “Most economists expect an annual growth rate of 6% or more for the rest of this decade.”
India appears to be benefiting from the phenomenon of many companies moving their factories to India from China.
American investors seem to be enthusiastic about INDA stock, as the shares have jumped about 15% between Oct. 27 and Jan. 16.
iShares MSCI Japan ETF (EWJ)
Warren Buffett has been a big fan of Japanese stocks in recent quarters. Specifically, the Oracle of Omaha has been steadily increasing his investments in “the five largest Japanese general trading companies since disclosing an increase in (his) ownership (of them) last summer,” Barron’s recently noted.
It’s a fair assumption that, with Buffett buying the shares of Japanese stock brokers hand-over-fist, he’s rather bullish about Japanese equities.
Investors who want to follow Buffett’s lead should buy the iShares MSCI Japan ETF (NYSEARCA:EWJ). Nearly 100% of its funds have been allocated to Japanese stocks.
Like INDA stock, EWJ is quite diversified from a sector perspective. Industrials, Consumer Goods, Financials, and Technology account for 25%, 22%, 15%, and 9.5% of its holdings, respectively.
Meanwhile, Japan’s government recently increased its estimate of growth for its current fiscal year to 1.6% above inflation versus its previous forecast of a 1.3% gain.
iShares MSCI Brazil ETF (EWZ)
Investors can get exposure to Brazil’s reasonably rapid economic growth and hot stock market through the iShares MSCI Brazil ETF (NYSEARCA:EWZ)
The Brazilian economy is expected to have grown 3% above inflation last year after growing at a 3% clip in 2022. If the 2023 forecast proves to be correct, it would mark the first two-year period since 2010-2011 (excluding its rebound from the pandemic) that the nation’s economy has expanded for two consecutive years.
Brazil’s economy has been helped by increases in the value of many commodities. With global inflation still moderately elevated and the EV and Energy Revolutions increasing the demand for many commodities, their prices will likely climb again in 2024.
Brazil’s stock exchange, the Bovespa, jumped 15% in 2023.
Nearly 94% of the ETF’s holdings consist of Brazilian stocks. As with the other two best country ETFs I’ve chosen, their holdings are very diversified regarding sector allocations.
Financials, Energy, Basic Materials, and Utilities comprise 22%, 19%, 17%, and 9% of its holdings, respectively.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
