SEE: 3 Secrets of Successful Companies.
Not So Easy
The easiest way to own the Barron's 30 would be to purchase a global total market ETF. Unfortunately, one doesn't exist that owns every stock in the world. As I said in the opening paragraph, all 30 trade on a U.S. exchange either as a U.S.-listed stock or as an ADR over the counter on the pink sheets. Therefore, you'd think the task would be a simple one. Think again. Most of the ADR-focused ETFs tend to limit themselves to around 50 or 100 stocks, leaving companies like Hyflux hard to come by.
SEE: How To Pump Up Your Portfolio With ETFs
iShares S&P Global Consumer Discretionary Sector Index Fund (ARCA:RXI)
This is my first ETF recommendation. There are 169 holdings in this ETF, including 11 companies from the Barron's 30. Among the fund's top 10 holdings are McDonald's (NYSE:MCD), Ford and Amazon.com. The average market cap is $36.3 billion and while Morningstar classifies the fund as "consumer cyclical," it's really a large-cap portfolio with 83% invested in some of the world's biggest consumer discretionary stocks. With one ETF already selected, we're slightly more than one-third of the way to completion.
iShares MSCI World Index Fund (ARCA:URTH)
I mentioned earlier that an ETF doesn't exist that owns every stock in the world. This one comes close, at 1490 holdings. Although the weightings are small, 27 of the Barron's 30 are owned by this fund, which seeks to replicate the returns of the MSCI World Index. Exxon Mobil (NYSE:XOM) is the largest holding (of the Barron's 30) at 1.68% of the portfolio. Because of this, it makes more sense to own the Global Consumer Discretionary fund for 11 of the 26 stocks and the MSCI World Index fund for the other 16. This leaves three stocks needing an ETF home: Hyflux Ltd., Tencent Holdings Ltd. and Ryanair Holdings PLC.
To complete this task, we'll have to select three different funds. For Hyflux, we'll have to go with the PowerShares Global Water Portfolio (ARCA:PIO), which is a group of 32 water-related stocks, including Hyflux at 2.6% of the overall holdings. The top holding is Veolia Environment (NYSE:VE), at 10.6%.
The next company is Tencent Holdings, the second largest holding of the Global X Social Media Index ETF (Nasdaq:SOCL) with a weighting of 11.1%. Only LinkedIn (NYSE:LNKD), at 11.74%, is higher. Tencent created the first instant messaging service in China back in 1998 and now it's the third largest internet company, with a market cap of $53 billion. Even though many probably haven't heard of the company, it's an important player in social media.
Lastly, we have Irish discount airline Ryanair Holdings PLC (Nasdaq:RYAAY), whose weighting (of the Barron's 30) is largest in the iShares MSCI Ireland Capped Investable Market Index Fund (ARCA:EIRL), at 4.41%. The fund has just 21 holdings with the top 10 representing 72% of the fund's total value. Ireland's had a tough go of it in recent years, making it the contrarian play of the bunch.
SEE: ETFS Vs Index Funds: Quantifying The Differences
The Bottom Line
To there you have it. In order to own the Barron's 30, it's almost easier to buy all 30 stocks than it is to find the appropriate ETFs. If you can live without the final three ETFs and opt for the Barron's 27 instead, then it becomes a much easier task.
SEE: Using ETFs For Small Periodic Investments
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Will Ashworth did not own shares in any of the companies mentioned in this article.
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