This ETF offers exposure to Australian equities, and is the most liquid and most popular option for achieving exposure to the Australian economy. As such, EWA can be potentially useful as a tool for fine tuning the international equity section of a long-term portfolio. It can also be a useful fund for making a short-term bet on Australia, a resource rich economy that might have tremendous appeal in certain environments. Investors building a long-term portfolio may find more broad-based EAFE ETFs such as EFA or VEA to be more efficient from a cost perspective.
Like many international equity ETFs, EWA is dominated by large cap stocks, which introduces certain biases into the portfolio. In the case of EWA, financials receive a heavy allocation, while access to the country's potentially desirable natural resources sector is relatively limited. The small-cap focused KROO might be a more appealing means of establishing exposure to Australia (or could alternatively be used to complement the exposure offered by EWA). Another potential alternative for exposure to Australian equities is AUSE; that ETF is linked to a dividend-weighted strategy that may be appealing to certain types of investors.