This Exchange-Traded Fund (ETF) is owned by Vanguard, one of the world’s largest fund managers with more than USD 7.2 billion in total assets under management.
It was founded in the United States in 1975 with one idea in mind: that an investment manager should manage funds in the sole interest of their clients. Thus, one of its objectives is to offer its investors easy access to diversified markets at a low cost, in order to retain more of their potential returns.
Vanguard has a wide range of equity and fixed-income ETFs, both from US and UCITS platforms, as well as some products in the Latam region in specific areas.
In particular, the Vanguard FTSE Emerging Markets ETF (VWO) has been one of the most popular names among ETF investors in recent years. VWO has stood out among other emerging markets ETFs because of its low cost and global reach.
Cost is one of the most important factors to consider when choosing an ETF. Vanguard’s VWO is one of the cheapest emerging markets ETFs on the market. The annual cost of the VWO is 0.08%.
Investors who hold VWO in their portfolios are mainly institutional and high-net-worth investors. This is because the VWO offers an excellent yield-to-cost ratio. In addition, the VWO is one of the largest emerging market ETFs, making it a good choice for institutional investors.
Construction, Index, and Investment Regions
The VWO is a physically replicated ETF, which means that it is composed of stocks. These stocks are from companies in Africa, Latin America, Asia, and the Middle East. The underlying index of the VWO is the FTSE Emerging Markets All Cap China A Inclusion Index, designed to provide broad exposure to emerging markets.
The VWO offers diversified equity exposure to over 2,000 companies from 28 emerging market countries. These countries include China, India, Brazil, South Korea, Mexico, Turkey, Taiwan, Malaysia, the Philippines, Indonesia, Saudi Arabia, South Africa, and others. The sectors most represented in the ETF include financial services, consumer staples, basic materials, technology, consumer discretionary, and energy.
Reviewing the country composition, Hong Kong and Taiwan are the largest positions in the fund, while Mexico and Indonesia are the most under-represented markets.
Other VWO indicators
| Fundamental | VWO | Benchmark |
| Number of shares | 5700 | 4547 |
| Median market cap | $19.2B | $19.1B |
| Earnings growth rate | 14,6% | 14,7% |
| Short-term reserves | – | – |
| P/E ratio | 11.5x | 11.6x |
| P/B ratio | 1.9x | 1.9x |
| Turnover rate (Fiscal year end 31/10/2022 | 7.4% | – |
| Return on equity | 15.3% | 15.3% |
Fuente: https://investor.vanguard.com/investment-products/etfs/profile/vwo#portfolio-composition
The Vanguard FTSE Emerging Markets ETF has more stocks than its benchmark, which indicates that it is quite diversified. It has a market value of over $19bn. In terms of Price to earnings ratio (PE ratio), it is 11.5x lower than its benchmark which is 11.6x.
This instrument has mainly stocks from the sectors: Financials, Electronic Technology and Technology Services.
Conclusions
| Advantages | Disadvantages |
| -Efficient -Large size -Diversified | It has a volatile nature. The ETF has currency risk. |
The Vanguard Emerging Markets Stock Index Fund from Vanguard is an ETF that has very good size, offers diversification in emerging markets, maintains an attractive cost, and replicates its benchmark with low tracking error.
