Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Follow Vanguard Investment Styles With These ETFs

By Zacks Investment ResearchStock MarketsFeb 21, 2018 03:37AM ET
Follow Vanguard Investment Styles With These ETFs
By Zacks Investment Research   |  Feb 21, 2018 03:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Amid the global stock market turmoil which started at the onset February, tracking an asset management behemoth could be the desire of many. Vanguard is one of the world's largest investment management companies with $4.9 trillion worth of global assets under management (as of Dec 31, 2017). The company is known especially for its low-cost exchange-traded funds.

So, Vanguard’s investment picks may come to the rescue, especially of those who do not have a strong stomach for risks (read: 5 ETFs Behind Vanguard's Success in 2017).

Cherry Pick Japan

Vanguard Group recently indicated that “a pickup in Japanese prices will boost the country’s equities, unlike in the U.S. where fears over inflation sent shares tumbling into a correction.”

Consumer prices in Japan increased 1.0% year over year in December 2017, up from a 0.6% nudge-up in the previous month and slightly below expectations of a 1.1% increase. It was the highest rate since March of 2015.

Also, Japanese stocks appear to have cheaper valuation. As per a source, in 2013, Japanese stocks were 60% pricier than American ones, going by the EV/EBITDA multiple. But currently, Japanese stocks are trading on an EV/EBITDA ratio of 8.4, which is 51% cheaper than the ratio in the United States (read: 5 Reasons to Buy Japan ETFs).

The likelihood of higher prices and cheap valuations make Vanguard “most positive” about Japanese stocks.

Investors can thus play products like First Trust Japan AlphaDEX Fund (PS:FJP) , Goldman Sachs (NYSE:GS) ActiveBeta Japan Equity ETF GSJY, Deutsche X-trackers Japan JPX-Nikkei 400 Equity ETF JPN, Franklin FTSE Japan ETF (FLJP and WisdomTree Japan SmallCap Dividend DFJ. Given the recent strength in yen, it is better not to have a focus on currency-hedged ETFs, at this moment.

Eager on Europe

Along with Japan, Vanguard bets big on Europe. The asset manager expects “those regions -- and almost everywhere else -- to do better than the U.S. in the long run.” The European Union economy expanded at its quickest clip (2.5%) in a decade in 2017, as per figures from the EU statistics office Eurostat. It was the region’s strongest performance since 2007, when it grew 2.7%.

In the fourth quarter of 2017, both the EU and the 19-nation eurozone expanded by 0.6% sequentially. Overall in 2017, the Euro zone grew by 2.5% while the U.S. economy grew 2.3% in 2017.

Products like First Trust United Kingdom AlphaDEX Fund FKU, SPDR MSCI Germany StrategicFactors (NYSE:QDEU) ETF QDEU, BLDRS Europe Select ADR Index Fund ADRU and Global X MSCI Norway ETF NORW are some of the trending ETFs in the Europe space (read: ECB Meeting Puts These Euro ETFs in Focus).

Cautious Stance on Emerging Markets

Though emerging markets are cheaper than Japan and has been going steady on a subdued greenback, commodity market strength and synchronized global growth, Vanguard is “more cautious” about them. The year 2018 started with lower investors risk appetite and if volatility levels flare up, emerging markets may not live up to high investors’ expectations.

Still, if investors are keen on playing the space, they can try low-risk and more strategic funds like iShares Edge MSCI Multifactor Emerging Markets ETF EMGF, FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund TLEH and WisdomTree Emerging Markets Dividend Fund DVEM.

Less-Optimistic on Global Stocks

As per the article published on Bloomberg, Vanguard is less optimistic on global stocks. The money manager reduced its 10-year global equity return outlook to a range of 4.5% to 6.5% in December, down from 5% to 8%. After a nice run in 2017, may be the markets are fairly-valued now and are likely to offer moderate returns ahead.

Still, investors wanting to try their luck in trending products may target Renaissance International IPO ETF IPOS, Principal Millennials Index ETF GENY, Davis Select Worldwide ETF DWLD, SPDR MSCI World StrategicFactors (NYSE:QWLD) ETF QWLD and Hartford Multifactor Global Small Cap ETF (SIX:RO) .

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

FT-UTD KINGDOM (FKU): ETF Research Reports

SPDR-MSCI WSF (QWLD): ETF Research Reports

RENAIS-INT IPO (IPOS): ETF Research Reports

ISHARS-FS MSCI (EMGF): ETF Research Reports

WISDMTR-JP SC D (DFJ): ETF Research Reports

GLBL-X NORWAY (NORW): ETF Research Reports

PRIN-MILLNLS (GENY): ETF Research Reports

BLDRS-EURO 100 (ADRU): ETF Research Reports

FT-JAPAN AD (FJP): ETF Research Reports

SPDR-MSCI GSF (QDEU): ETF Research Reports

GS-ACTBTA JP EQ (GSJY): ETF Research Reports

FLEXS-CH MEMFT (TLEH): ETF Research Reports

DAVIS-SEL WW (DWLD): ETF Research Reports

Original post

Zacks Investment Research

Follow Vanguard Investment Styles With These ETFs

Related Articles

Follow Vanguard Investment Styles With These ETFs

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email