USA
Franklin Templeton adds EM countries to offering
Franklin Templeton is widening out its country-specific and region-specific ETF suite, listing three new low-cost funds offering access to emerging markets.
The three funds are all very biscuit tin and track market cap weighted indexes for South Africa, Saudi Arabia and Latin America. For those wondering, Latin America includes Brazil, Chile, Colombia, Mexico and Peru – but not Argentina and Mexico. The indexes also build in caps to stop the biggest companies hogging too much weight in the index.
FLLA will charge 0.25%.
FLSA will charge 0.39%.
FLZA will charge 0.19%.
The indexes are provided by FTSE Russell, as with Franklin Templeton’s other country-specific ETFs.
Analysis – Country ETFs mean taxes and currency risk
Buying country ETFs is always a good idea as it allows you to extend Jack Bogle’s original passive index proposition to other markets. But those wanting to track market-weighted indexes in other countries need to understand that there are taxes involved, and there is also currency risk.
Let’s take me as an example. I’m based in the UK (in Sussex, if you must know, with my pet ducks). But say I'm getting sick of the UK and want to buy some Australian ETFs. Before I do, I need to keep an eye on that Aussie dollar (Australian shares are mostly priced in AUD) as currency movements can affect my return. I also need to get my head around Australian taxes, as owning an Australian ETF as a British resident means I get hit with a bunch of new taxes.
I have absolutely no idea what the tax implications of a Saudi Arabian ETF will be for US residents. And for the life of me, I know nothing about Peru’s currency, the Sol. But investors considering today’s listings better make sure they understand both.