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Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO): Its Growth Over The Past Decade

Posted in Markets3 years ago • Written by SallyNo Comments

Dallas, Texas, 09/30/2013 (ustrademedia) – Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO) provides a broad and weighted exposure to the equities of emerging markets and forms a part of the line-up of Vanguard’s low-priced and core exchange traded funds. The underlying reason behind investment in international equities is diversification since such an activity creates exposure to different sectors, economies and countries with the help of varied foreign currencies. The Exchange Traded Funds (ETFs) of Vanguard are not redeemable, but the investors are allowed to buy or sell the ETF shares of Vanguard with the help of a stockbroker in the secondary market. Thus the price incurs a brokerage commission and the investors at the time of buying have to pay more than the net asset value of the shares, but at the time of selling they receive less than the net asset value of the shares.

VWO experienced one of the most significant growths over the past years because of the loose monetary policies of the central bank, i.e. the U.S. Federal Reserve. VWO has become the third largest exchange trade fund in the market because of the investment of over $38 billion by the investors during the past few years. VWO declared an attractive price of 0.20% and has placed itself in a position of being the largest fund that focuses on broad emerging markets. Investors were satisfied on the policies implemented by the central bank on the trade of options contract, as the trade of option included a norm of the possibility of worthless expiring of the option contract. Under this policy, if the strike price of an option is $42, then expecting an odd of 59% as per the market if the option contract expires worthless, such will represent 1.79% return on the cash commitments by the investors, i.e. an annualized return of 18.1%. This has attracted the investments of the investors and has led to increase in total investment.

As per the current scenario, some weaknesses have been exposed in certain emerging markets which are feared to affect the growth potential of the market. But due to the rush of global liquidity, expectations have been linked to the high growth of the emerging markets in the future.


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