VIDEO: ETF of the Week: VWO

Core Viewpoint - The Vanguard FTSE Emerging Markets ETF (VWO) is highlighted due to its strong performance and low expense ratio, making it an attractive option for investors seeking exposure to emerging markets [2][3][10]. Fund Performance and Popularity - Emerging market ETFs have seen significant popularity, with over $20 billion in new net inflows recorded in January [2]. - VWO has been around for more than a decade and is recognized as a foundational ETF for investors looking to diversify beyond domestic markets [2][10]. Cost Efficiency - Vanguard has reduced the expense ratio for VWO to six basis points, making it cheaper than many comparable funds, including those from iShares [3][5]. - The average expense ratio for similar funds is over 100 basis points, highlighting VWO's cost advantage [5][16]. Market Trends and Diversification - Emerging markets have outperformed U.S. equities, prompting investors to seek diversification away from U.S. large-cap stocks [7][9]. - Key countries represented in VWO include China, Taiwan, India, South Africa, and Brazil, providing a broad exposure to emerging markets [9][10]. Investment Strategy - VWO is positioned as a core holding for international equity exposure, suitable for pairing with actively managed strategies for enhanced performance [15][16]. - A recommended allocation for emerging markets in a portfolio is between 5% and 10%, reflecting the higher risk and potential rewards associated with this asset class [19].