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This has been a great year for Wall Street but other corners of the globe haven’t returned in that a stellar fashion. Virus and the resultant lockdown fears, a slowdown in activity, rising inflation, a stronger U.S. dollar and doldrums in all-important Chinese economy and markets have weighed on foreign stocks occasionally and led it trail the U.S. Index S&P 500 (up 25.9% YTD).
Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 6.9% so far in 2021. No wonder, this weighed on the emerging market investing. Investors should note that iShares MSCI Emerging Markets ETF (EEM - Free Report) lost about 6.8%. Asia ETF iShares Asia 50 ETF (AIA - Free Report) is down 13.2%, First Trust Latin America AlphaDEX FundFLN retreated 10.2% and iShares China Large-Cap ETF (FXI - Free Report) nosedived 21.7%.
Developed market ETF iShares MSCI EAFE ETF (EFA - Free Report) has tacked on 9.7% gains. iShares MSCI Japan ETF (EWJ - Free Report) has lost 0.5%, Vanguard FTSE Europe ETF (VGK - Free Report) is up 9.8% and iShares MSCI Eurozone ETF (EZU - Free Report) has advanced about 6.9% this year.
What Led to the Somber Story for International Market?
Asia has been a key laggard with the Chinese markets taking a hit from the government’s regulatory crackdown. China’s real estate market bubble also worsened the matter. Chinese property giant Evergrande (which has a considerable global market access and whose liabilities exceed $300bn (£228bn), failed to meet interest payments to international investors.
Per tradingeconomics, the Chinese economy grew by a seasonally adjusted 0.2% sequentially in Q3 of 2021, compared with market estimates of a 0.5% expansion and following a marginally revised 1.2% advance in the previous quarter. This was the weakest quarterly growth since a contraction in Q1 of 2020.
The Japanese economy shrank 0.9% sequentially in Q3 of 2021, compared with the flash estimate of a 0.8% fall and after an upwardly revised 0.5% growth in Q2, amid a resurgence of COVID-19 cases and persistent supply chain disruptions. Exports fell for the first time in five quarters while imports dropped for the first time in a year, per tradingeconomics.
Europe was better as the Euro Area economy advanced 2.2% sequentially Q3 of 2021, following an upwardly revised 2.2% growth in the previous period, and matching initial estimates. But lockdowns were enacted in several countries, which weighed on the markets.
What Won?
Against this backdrop, below we highlight a few broad international ETFs that have topped the chart in the space although lagged the S&P 500. Investors should note that Canada was the topper in the international market in 2021 with funds heavy on Canada benefiting from the trend. Plus, currency-hedged ETFs also outperformed the regular ones due to the greenback strength. Thirst for dividends was notable in the international market.
Best-Performing International ETFs
Invesco International Dividend Achievers ETF (PID - Free Report) – Up 20.1%
The underlying NASDAQ International Dividend Achievers Index identifies an international group of ADR, GDR and non-US ordinary stocks that have qualified as International Dividend Achievers. These companies have increased their aggregate annual regular cash dividend payments consistently for at least each of the last five consecutive years. The fund charges 56 bps and yields 2.88% annually. Canada (64.8%) takes the top spot in the fund.
The underlying MSCI EAFE 100% Hedged to USD Index is an equity benchmark for its international stock performance with the currency risk of the securities included in the Underlying Index hedged against the U.S. dollar on a monthly basis. Japan (23.35%), United Kingdom (14.36%), France (11.54%) and Switzerland (10.41%) get a double-digit weight in HEFA. HEFA charges 35 bps in fees and yields 2.11% annually.
WisdomTree International Hedged Quality Dividend Growth Fund (IHDG - Free Report) – Up 17.4%
The underlying WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar. United Kingdom (16.8%), Japan (13.3%), Switzerland (11.5%) and France (11.2%) receive a double-digit weight in the fund.
Legg Mason International Low Volatility High Dividend ETF (LVHI - Free Report) – Up 16.8%
The underlying QS International Low Volatility High Dividend Hedged Index is composed of equity securities of developed markets outside the United States with relatively high yield and low price and earnings volatility while mitigating exposure to fluctuations between the values of the U.S. dollar and other international currencies. Here also, Japan, Canada and United Kingdom get a double-digit weight in LVHI.
Invesco DWA Developed Markets Momentum ETFPIZ – Up 16.3%
The underlying Dorsey Wright Developed Markets Technical Leaders Index includes approximately 100 companies that possess powerful relative strength characteristics and are domiciled in developed markets. It charges 80 bps and yields 0.44% annually.
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Top-Performing Broad Foreign ETFs of 2021
This has been a great year for Wall Street but other corners of the globe haven’t returned in that a stellar fashion. Virus and the resultant lockdown fears, a slowdown in activity, rising inflation, a stronger U.S. dollar and doldrums in all-important Chinese economy and markets have weighed on foreign stocks occasionally and led it trail the U.S. Index S&P 500 (up 25.9% YTD).
Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) has gained 6.9% so far in 2021. No wonder, this weighed on the emerging market investing. Investors should note that iShares MSCI Emerging Markets ETF (EEM - Free Report) lost about 6.8%. Asia ETF iShares Asia 50 ETF (AIA - Free Report) is down 13.2%, First Trust Latin America AlphaDEX Fund FLN retreated 10.2% and iShares China Large-Cap ETF (FXI - Free Report) nosedived 21.7%.
Developed market ETF iShares MSCI EAFE ETF (EFA - Free Report) has tacked on 9.7% gains. iShares MSCI Japan ETF (EWJ - Free Report) has lost 0.5%, Vanguard FTSE Europe ETF (VGK - Free Report) is up 9.8% and iShares MSCI Eurozone ETF (EZU - Free Report) has advanced about 6.9% this year.
What Led to the Somber Story for International Market?
Asia has been a key laggard with the Chinese markets taking a hit from the government’s regulatory crackdown. China’s real estate market bubble also worsened the matter. Chinese property giant Evergrande (which has a considerable global market access and whose liabilities exceed $300bn (£228bn), failed to meet interest payments to international investors.
Per tradingeconomics, the Chinese economy grew by a seasonally adjusted 0.2% sequentially in Q3 of 2021, compared with market estimates of a 0.5% expansion and following a marginally revised 1.2% advance in the previous quarter. This was the weakest quarterly growth since a contraction in Q1 of 2020.
The Japanese economy shrank 0.9% sequentially in Q3 of 2021, compared with the flash estimate of a 0.8% fall and after an upwardly revised 0.5% growth in Q2, amid a resurgence of COVID-19 cases and persistent supply chain disruptions. Exports fell for the first time in five quarters while imports dropped for the first time in a year, per tradingeconomics.
Europe was better as the Euro Area economy advanced 2.2% sequentially Q3 of 2021, following an upwardly revised 2.2% growth in the previous period, and matching initial estimates. But lockdowns were enacted in several countries, which weighed on the markets.
What Won?
Against this backdrop, below we highlight a few broad international ETFs that have topped the chart in the space although lagged the S&P 500. Investors should note that Canada was the topper in the international market in 2021 with funds heavy on Canada benefiting from the trend. Plus, currency-hedged ETFs also outperformed the regular ones due to the greenback strength. Thirst for dividends was notable in the international market.
Best-Performing International ETFs
Invesco International Dividend Achievers ETF (PID - Free Report) – Up 20.1%
The underlying NASDAQ International Dividend Achievers Index identifies an international group of ADR, GDR and non-US ordinary stocks that have qualified as International Dividend Achievers. These companies have increased their aggregate annual regular cash dividend payments consistently for at least each of the last five consecutive years. The fund charges 56 bps and yields 2.88% annually. Canada (64.8%) takes the top spot in the fund.
iShares Currency Hedged MSCI EAFE ETF (HEFA - Free Report) – Up 17.9%
The underlying MSCI EAFE 100% Hedged to USD Index is an equity benchmark for its international stock performance with the currency risk of the securities included in the Underlying Index hedged against the U.S. dollar on a monthly basis. Japan (23.35%), United Kingdom (14.36%), France (11.54%) and Switzerland (10.41%) get a double-digit weight in HEFA. HEFA charges 35 bps in fees and yields 2.11% annually.
WisdomTree International Hedged Quality Dividend Growth Fund (IHDG - Free Report) – Up 17.4%
The underlying WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar. United Kingdom (16.8%), Japan (13.3%), Switzerland (11.5%) and France (11.2%) receive a double-digit weight in the fund.
Legg Mason International Low Volatility High Dividend ETF (LVHI - Free Report) – Up 16.8%
The underlying QS International Low Volatility High Dividend Hedged Index is composed of equity securities of developed markets outside the United States with relatively high yield and low price and earnings volatility while mitigating exposure to fluctuations between the values of the U.S. dollar and other international currencies. Here also, Japan, Canada and United Kingdom get a double-digit weight in LVHI.
Invesco DWA Developed Markets Momentum ETF PIZ – Up 16.3%
The underlying Dorsey Wright Developed Markets Technical Leaders Index includes approximately 100 companies that possess powerful relative strength characteristics and are domiciled in developed markets. It charges 80 bps and yields 0.44% annually.