Investors Continue Pouring Into Ex-US Equity ETFs

Investors are looking for value outside the U.S. as one of the longest bull markets in history ages and that search is benefiting an array of international equity exchange traded funds tracking developed and emerging markets.

Data confirm as much. Year-to-date, five of the top 10 asset-gathering ETFs are ex-U.S. international equity funds – two emerging markets funds and three developed markets ETFs. At least four of those five ETFs can be considered “cheap” when it comes to fees.

Though it is not, at least not yet, among this year's top 10 asset-gathering ETFs, the iShares Core MSCI Total International Stock ETF IXUS is adding new assets at a brisk pace.

A Little About IXUS

“The fund has reeled in an impressive more than $1.7 billion year-to-date, and has gained ground on two larger funds from Vanguard that are presently ranked #1 and #2 in the space (IXUS is ranked #3) in terms of asset size,” said Street One Financial Vice President Paul Weisbruch in a note out Monday. 

Year-to-date inflows of $1.7 billion for IXUS represent a significant portion of the ETF's $5.8 billion in assets under management. IXUS, which debuted in October 2012, offers investors a deep bench to developed markets with a roster of over 3,300 holdings.

With an annual fee of just 0.11 percent, IXUS competes with some well-known Vanguard ETFs in terms of price. Those funds include the Vanguard FTSE All-Wld ex-US ETF VEU and the Vanguard Total International Stock ETF VXUS.

IXUS's Geographical Exposure And Sector Weights

“Listed at 11 basis points in terms of its expense ratio, IXUS clearly was launched to take aim at VXUS (which has the same expense ratio), which hit the market in January of 2011,” added Weisbruch. “IXUS tracks the MSCI ACWI ex-U.S. Index, while VXUS tracks the FTSE Global All-Cap ex-U.S. Index, and it is fair to say that IXUS has been narrowing the AUM size gap recently thanks to healthy inflows.”

IXUS features exposure to about 20 countries, including developed and emerging markets. The ETF's largest geographic allocations are Japan and the U.K., which combine for over 27 percent of the fund's weight.

Financials are the largest sector weight in IXUS at 21 percent while industrial, consumer discretionary and technology stocks combine for over a third of the fund's roster. IXUS has a three-year standard deviation of 12.2 percent.