A Strong Dollar Has Made These Stocks Cheaper

A stronger dollar means Americans can get more foreign goods, including stocks, for the same amount of money.

Today, we’re looking at financial pros’ top-searched global stock ETF, the iShares MSCI World ETF (URTH). With so many international stocks getting beat up and the U.S. dollar at its highest in years, is now the time to diversify via this ETF?

URTH invests in a broad range of companies in developed markets worldwide. These places include many European countries, Japan, and more. So investors can invest in the developed world through this single fund. Moreover, URTH gives them exposure to some domestic equities. 

There are slightly over 1,500 stocks in URTH. Here are more of the portfolio’s characteristics:

URTH is a diversified fund with exposure to many different sectors. Information technology stocks comprise 21.1% of the portfolio, while healthcare makes up 13.8%. The total sector breakdown is as follows:

The top three stocks in the portfolio make up 10.7% of its weighting: Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN). While the fund invests in domestic and international stocks, the top 10 are domestic. Here’s the full top 10: 

URTH started trading on January 10, 2012. It’s comforting knowing it’s been around for over a decade. 

It’s performed well over that time, too. If you invested $10,000 in the ETF five years ago, it would be worth more than $13,300 now. That same investment 10 years ago would be worth more than $23,000 now. 

Trading URTH

URTH is not an actively traded ETF. On average, it trades 277K shares daily. However, it’s optionable, giving traders greater flexibility choosing strategies. 

Investing in URTH

URTH offers investors an annual dividend of $2.04 per share, a current yield of 1.93%. It charges an expense ratio of 0.24%, which is competitive in the ETF space. 

Alternatives to URTH

If you want exposure to international and domestic stocks, you’re not limited to URTH. 

Your options include SPDR Portfolio MSCI Global Stock Market ETF (SPGM), SPDR Portfolio Developed World ex-US ETF (SPDW), Vanguard FTSE All-World ex-US ETF (VEU), and Vanguard Total World Stock ETF (VT). 

SPGM charges an expense ratio of 0.09%, significantly lower than URTH’s. It pays a dividend yield of 2.73%. And it trades at less than half of URTH’s price. However, it hasn’t performed as well over the last five or 10 years, returning 32% and 121% respectively. The returns of the top 10 holdings are nearly identical. 

SPDW invests in non-U.S. equities, so it’s not a pure comparison. But it might be worth a look if you want international exposure. It charges an expense ratio of 0.04% and has a dividend yield of 4.36%. Its performance falls short with a return of just 1.4% over the last five years.

VEU, like SPDW, will get you global equity exposure minus U.S. stocks. It pays an annual dividend yield of 3.85% and charges an expense ratio of 0.07%. Its biggest holdings are Nestle and Tencent Holdings. VEU’s performance hasn’t been great either. Over the last five years, it has returned 1.3%. 

VT charges an expense ratio of 0.07% and pays a dividend yield of 2.36%. It has many of the same holdings as URTH. But its shares cost less. The ETF has returned over 30% over the last five years. At 1.9 million shares traded daily, it’s more liquid than URTH. 

Our Opinion 4/10

URTH is a solid ETF. However, no international stocks are part of its top 10 holdings. You’re better off investing in the SPDR S&P 500 ETF Trust (SPY), which has a better track record over the last 10 years. 

While iShares makes great ETF products, we’ll pass on URTH because it doesn’t offer anything special. 

We like the SPDW better, as its holdings include developed-world companies, excluding the U.S.