Headwinds Are Building, But This ETF Still Has Room to Run in 2019

Economies across the developed world are set to slow this year, and this trend is projected to continue early into the next decade. This has spurred a change in policy from central banks, which seemed to be dead set on a path of monetary tightening in 2017 and 2018.

Interestingly, the Bank of Canada is one of the few who are still preaching optimism, the expectation being that Canada’s economy will bounce back in the second half of 2019.

The Vanguard FTSE Developed Markets ETF (NYSE:VEA) seeks to track the investment performance of the FTSE Developed All Cap ex U.S. Index.

The ETF has climbed 11.5% in 2019 as of close on April 2. The fund has 52.8% of its holdings in Europe, 37.5% in the Pacific region, and 8.7% in North American markets. Some of its top holdings include Nestle SA, Samsung Electronics, and HSBC Holdings.

Naturally there are some near term risks for an ETF which is so heavily weighted in European equities. The major risk this spring is the drama surrounding Brexit.

British and European leaders are scrambling for an agreement, but a deal has been elusive. A no-deal Brexit has the potential to spark a massive selloff in the global economy and would be particularly damaging to Europe. Still, a no-deal Brexit remains unlikely even at this late stage.

Investors looking for some exposure outside of the pricey U.S. market should consider this ETF today.