Retirement investing doesn't have to be complicated. A few well-chosen exchange-traded funds can go a long way toward helping you grow your investment portfolio to a level that can fund a long and happy retirement.
But if you'd like to supplement the core of your investment portfolio with funds that could potentially boost your returns, one way to do so is to identify markets that could deliver above-average growth. In this regard, here are three ETFs that offer the promise of strong price appreciation in the years ahead.
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The awakened giant
One economy that's likely to grow significantly faster than that of the U.S. in the coming decade is China. The country's massive economy accelerated to 6.9% growth in 2017, up from 6.7% in 2016. This compares to 2.3% and 1.6%, respectively, for the U.S. during the same time period. Moreover, while U.S. GDP growth is projected to rise by as much as 2.8% in 2018, China's GDP is forecasted to grow by 6.5%. Looking even further ahead, China's fast-growing economy is expected to overtake that of the U.S. by around 2030.
Three trends in particular are fueling China's expansion:
- Rising income levels
- Increasing consumer spending
- The growth of e-commerce
One of the best ways to profit from these trends is the WisdomTree China ex-State-Owned Enterprises Fund (CXSE 1.28%). This ETF provides investors with access to more than 100 Chinese companies. And by excluding government-run corporations, which tend to be highly bureaucratic, the ETF focuses on the more innovative areas of the Chinese economy.
Major holdings include Chinese internet and e-commerce leaders such as Tencent, Alibaba, Baidu, and JD.com. With these powerful and fast-growing businesses comprising more than a quarter of its investments, the WisdomTree China ex-State-Owned Enterprises Fund has a well-built foundation. In addition, with more than 100 other public Chinese companies filling out the remainder of its portfolio, the ETF gives investors exposure to a broad swath of China's rapidly growing economy -- all for an annual fee of 0.63%, which, while higher than more diversified funds, is quite reasonable for a fund that offers this type of targeted exposure to such an intriguing international market.
An emerging, often-overlooked powerhouse
One nation that's expected to expand at an even faster rate than China is India. The Indian economy is forecasted to grow at 7.2% in 2018 and 7.4% in 2019, according to a report by the United Nations. And some analysts believe India could grow at 8% for the next two decades.
Yet despite its tremendous economic promise, India is often unrepresented in investors' portfolios. Fortunately, the iShares MSCI India ETF (INDA) can help in this regard. It's the largest India ETF with more than $5 billion in assets under management. For a relatively low fee of 0.68% (the average fee for an India ETF is 0.77%), the iShares MSCI India ETF provides investors with access to 80 Indian businesses that collectively comprise about 85% of the Indian stock market. Major holdings include intriguing plays on India's booming economy such as HDFC Bank and Tata Motors. And the fund is heavily weighted toward high-growth sectors including financial, consumer discretionary, and software related businesses.
Those willing to endure more volatility and incur more risk in exchange for the prospect of even greater rewards may wish to also consider the iShares MSCI India Small Cap ETF (SMIN 0.17%). For a slightly higher fee of 0.75%, this ETF gives investors access to more than 270 small and mid-sized businesses that represent the bottom 14% of the Indian market not covered by INDA. So SMIN can give you access to not only the world's fastest-growing economy, but also the companies likely to enjoy the most rapid growth within it.
Moreover, investors who choose to own both the iShares MSCI India ETF and the iShares MSCI India Small Cap ETF can profit from the blistering long-term expansion of what is essentially the entire Indian economy.
