ETF v praxi
ETF of the month February 2028: how to tell whether a country-specific fund is worth it
Key takeaways
- When selecting an ETF for a specific country, looking only at historical returns is not enough — liquidity, TER and holdings concentration are the key metrics.
- A daily trading volume below EUR 1 million signals a potential liquidity problem in crisis situations.
- TER for single-country EM ETFs is typically 3–5 times higher than for global funds — this shows up in long-term results.
- High concentration (top 3 holdings above 40%) effectively turns an ETF into a bet on a few specific companies.
- If a fund does not meet basic criteria, a broad EM ETF is a safer alternative.
Why choosing the right country is not enough
Investors who decide to add exposure to a specific country take the first step correctly — they think through whether that economy makes sense. But then comes the second step: choosing the specific ETF. And that is where mistakes are made. Not because the selection is complex, but because investors look only at historical returns and ignore three key parameters: liquidity, TER and concentration.
Parameter one: liquidity
ETF liquidity manifests on two levels. Primary is the liquidity of the underlying assets — if a fund holds shares in a small market with low trading volumes, the fund itself will be harder to trade. Secondary is the spread on the exchange — the difference between the buy and sell price of the ETF. For small single-country ETFs (e.g. Vietnam, Oman), the spread can reach 0.5–1% or more, while for large global ETFs it is typically below 0.05%.
A practical rule: look at the average daily trading volume. A fund with a volume below EUR 1 million per day is difficult for a retail investor to sell at a fair price in a crisis.
Parameter two: TER (Total Expense Ratio)
TER is the annual management fee that is automatically deducted from fund performance. For global ETFs (MSCI World, S&P 500), it ranges from 0.07% to 0.20%. For single-country ETFs on emerging or frontier markets it can reach 0.5–0.9%. The higher the TER, the more the fund must earn to beat its benchmark after fees.
Parameter three: holdings concentration
Single-country ETFs tend to be significantly more concentrated than global funds. Look at the top 10 holdings share — if the first three companies account for 40% or more of the index, you are effectively betting on those specific companies, not on the whole economy. This increases specific risk and reduces the diversification benefit you are paying the ETF for.
- Check: what is the top 1 holding's share? Above 15% is a warning sign.
- Check: what is the dominant sector's share? Above 40% creates sector risk.
- Check: how many stocks does the fund hold? Below 30 names is very limited diversification.
How to combine these three parameters into a decision
An ideal single-country ETF has: daily volume above EUR 5 million, TER below 0.5%, no holding above 15% and at least 40–50 names. Reality is often different — especially for small or frontier markets. If a fund does not meet these criteria, it is worth considering an alternative: a broad EM ETF where that country is represented by a smaller but liquidly accessible slice.
For a deeper understanding of how ETFs work and what to watch for when selecting one, I recommend why UCITS ETFs with Irish domicile or how ETFs are taxed in the Czech Republic. You can find a specific fund overview on the ETF page.
FAQ
How do I find the daily trading volume of an ETF?
On platforms such as JustETF, ETF.com or directly on the exchange (Xetra, LSE) you can find the trading volume history. Look for the 3-month average — one-off spikes can give a distorted picture.
What is an ETF spread and why does it matter?
The spread is the difference between the best ask and bid price on the exchange. For small ETFs it can reach 0.5–1%. You pay this spread on every purchase and every sale — for short-term trading it quickly adds up.
When does a single-country ETF make more sense than a broad EM ETF?
When you have a strong conviction about a specific market, understand its specifics and the fund meets basic liquidity and TER criteria. For most retail investors, a broad EM ETF is a more practical and less risky solution.