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Use ETFs to Ride the Rising Global Growth Optimistic Wave
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Fueled by a rise in household income, driven by moderating inflation levels globally and favorable financial conditions, S&P Global Market Intelligence again upgraded its 2024 global growth forecast, estimating annual real GDP growth to reach 2.6% from the previously mentioned 2.3%. The annual global real GDP growth rate for 2025 remains unchanged by the agency, standing at 2.6%.
Improving Global PMI
Improving the global purchasing manager’s index (PMI) indicates further improvement in global economic conditions. The J.P. Morgan Global Composite PMI Output Index, compiled by S&P Global, demonstrated its fourth consecutive monthly improvement in February, hitting a nine-month peak.
Output indexes for both manufacturing and services surpassed the expansion level in February, the first time since mid-2022. Recent positive signals include an upsurge in the global PMI's order-to-inventory ratio and an improvement in export orders. Notably, the latter serves as a pivotal indicator for global trade trends.
Other Upgrades in Global Ratings
Fitch Ratings joined S&P Global in upgrading its global GDP growth forecast to 2.4% for 2024, driven by improving near-term global growth prospects. According to Barrons, the rating agency also revised its growth projections for 2025 upward to 2.5%.
In late January 2024, the IMF lifted its global growth expectations, emphasizing the quicker-than-anticipated moderation in inflation rates. The UN financial agency’s current forecast for global economic growth stands at 3.1% for 2024, with projections for 2025 unchanged at 3.2%.
Substantial Inflows Into Global Equity Funds
LSEG data reveals a noteworthy influx of $22.63 billion into global equity funds during the week ending Mar 13, marking the highest weekly inflow since February 2022, according to Reuters.
Among regions, European equity funds led the surge with $15.07 billion in inflows, the highest since Feb 2, 2022. Additionally, U.S. and Asian equity funds experienced substantial inflows of $4.93 billion and $2.11 billion, respectively.
Emerging market funds witnessed a shift in trends, as bond funds received $473 million, breaking a four-week streak of outflows.
ETFs in Focus
Against this backdrop, below we have highlighted a few global equity ETFs that could be tapped for gains.
Schwab International Equity ETF seeks to track the performance of the FTSE Developed ex-US Index, comprised of large and mid-cap companies in developed countries outside the United States.
The fund has a basket of 1,534 securities and has gathered an asset base of $36.47 billion. SCHF charges a low annual fee of 0.06% and has a dividend yield of 2.85%.
Schwab International Equity ETF has major exposure to the financials (20.13%), industrials (16.55%) and consumer discretionary (10.98%) sectors, with Japan (21.34%), the U.K. (12.68%) and France (9.62%) being the top three countries where assets of the fund are allocated. The fund has gained 7.45% over the past three months and 14.26% over the past year.
Schwab Fundamental International Large Co. Index ETF (FNDF - Free Report)
Schwab Fundamental International Large Co. Index ETF seeks to track the performance of the Russell RAFI Developed ex US Large Company Index, having exposure to the largest developed international companies based on fundamental measures.
The fund has a basket of 941 securities and has gathered an asset base of $12.56 billion. FNDF charges an annual fee of 0.25% and has a dividend yield of 3.29%.
Schwab Fundamental International Large Co. Index ETF has major exposure to the financials (18.83%), industrials (15.38%) and consumer discretionary (12.94%) sectors, with Japan (26.59%), the U.K. (14.56%) and France (8.43%) being the top three countries where assets of the fund are allocated. The fund has gained 5.89% over the past three months and 14.06% over the past year.
iShares MSCI EAFE Growth ETF seeks to track the performance of the MSCI EAFE Growth Index that includes securities of companies located in Europe, Australasia and the Far East, whose earnings are expected to grow at an above-average rate relative to the market.
The fund has a basket of 389 securities and has gathered an asset base of $12.18 billion. EFG charges an annual fee of 0.36% and has a dividend yield of 1.53%.
iShares MSCI EAFE Growth ETF has major exposure to the industrials (18.80%), consumer discretionary (16.40%) and information technology (15.74%) sectors, with Japan (22.40%), France (13.68%) and the U.K. (12.51%) being the top three countries where assets of the fund are allocated. The fund has gained 10.65% over the past three months and 16.95% over the past year.
Capital Group International Focus Equity ETF (CGXU - Free Report)
Capital Group International Focus Equity ETF employs an active strategy, exploring opportunities outside the United States, including emerging markets, with a company-by-company-focused strategy that seeks long-term growth of capital.
The fund has a basket of 70 securities and has gathered an asset base of $2.25 billion. CGXU has an annual fee of 0.54% and a dividend yield of 0.93%.
Capital Group International Focus Equity ETF has major exposure to the industrials (18.3%), consumer discretionary (13.7%) and information technology (13.5%) sectors, with Japan (13.3%), India (11.27%) and France (10.85%) being the top three countries where assets of the fund are allocated. The fund has gained 9.11% over the past three months and 13.72% over the past year.
Avantis International Equity ETF employs an active strategy, having exposure in a broad set of companies of all market capitalizations across non-U.S. developed countries and is designed to increase expected returns by overweighting securities we believe to be trading at lower valuations with higher profitability ratios.
The fund has a basket of 3,267 securities and has gathered an asset base of $4.19 billion. The fund has an annual fee of 0.23% and a dividend yield of 2.90%.
Avantis International Equity ETF has major exposure to the financials (21%), industrials (19%) and consumer discretionary (12%) sectors, with Japan (22%), the U.K. (13%) and Canada (10%) being the top three countries where assets of the fund are allocated. The fund has gained 6.93% over the past three months and 12.42% over the past year.
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Use ETFs to Ride the Rising Global Growth Optimistic Wave
Fueled by a rise in household income, driven by moderating inflation levels globally and favorable financial conditions, S&P Global Market Intelligence again upgraded its 2024 global growth forecast, estimating annual real GDP growth to reach 2.6% from the previously mentioned 2.3%. The annual global real GDP growth rate for 2025 remains unchanged by the agency, standing at 2.6%.
Improving Global PMI
Improving the global purchasing manager’s index (PMI) indicates further improvement in global economic conditions. The J.P. Morgan Global Composite PMI Output Index, compiled by S&P Global, demonstrated its fourth consecutive monthly improvement in February, hitting a nine-month peak.
Output indexes for both manufacturing and services surpassed the expansion level in February, the first time since mid-2022. Recent positive signals include an upsurge in the global PMI's order-to-inventory ratio and an improvement in export orders. Notably, the latter serves as a pivotal indicator for global trade trends.
Other Upgrades in Global Ratings
Fitch Ratings joined S&P Global in upgrading its global GDP growth forecast to 2.4% for 2024, driven by improving near-term global growth prospects. According to Barrons, the rating agency also revised its growth projections for 2025 upward to 2.5%.
In late January 2024, the IMF lifted its global growth expectations, emphasizing the quicker-than-anticipated moderation in inflation rates. The UN financial agency’s current forecast for global economic growth stands at 3.1% for 2024, with projections for 2025 unchanged at 3.2%.
Substantial Inflows Into Global Equity Funds
LSEG data reveals a noteworthy influx of $22.63 billion into global equity funds during the week ending Mar 13, marking the highest weekly inflow since February 2022, according to Reuters.
Among regions, European equity funds led the surge with $15.07 billion in inflows, the highest since Feb 2, 2022. Additionally, U.S. and Asian equity funds experienced substantial inflows of $4.93 billion and $2.11 billion, respectively.
Emerging market funds witnessed a shift in trends, as bond funds received $473 million, breaking a four-week streak of outflows.
ETFs in Focus
Against this backdrop, below we have highlighted a few global equity ETFs that could be tapped for gains.
Schwab International Equity ETF (SCHF - Free Report)
Schwab International Equity ETF seeks to track the performance of the FTSE Developed ex-US Index, comprised of large and mid-cap companies in developed countries outside the United States.
The fund has a basket of 1,534 securities and has gathered an asset base of $36.47 billion. SCHF charges a low annual fee of 0.06% and has a dividend yield of 2.85%.
Schwab International Equity ETF has major exposure to the financials (20.13%), industrials (16.55%) and consumer discretionary (10.98%) sectors, with Japan (21.34%), the U.K. (12.68%) and France (9.62%) being the top three countries where assets of the fund are allocated. The fund has gained 7.45% over the past three months and 14.26% over the past year.
Schwab Fundamental International Large Co. Index ETF (FNDF - Free Report)
Schwab Fundamental International Large Co. Index ETF seeks to track the performance of the Russell RAFI Developed ex US Large Company Index, having exposure to the largest developed international companies based on fundamental measures.
The fund has a basket of 941 securities and has gathered an asset base of $12.56 billion. FNDF charges an annual fee of 0.25% and has a dividend yield of 3.29%.
Schwab Fundamental International Large Co. Index ETF has major exposure to the financials (18.83%), industrials (15.38%) and consumer discretionary (12.94%) sectors, with Japan (26.59%), the U.K. (14.56%) and France (8.43%) being the top three countries where assets of the fund are allocated. The fund has gained 5.89% over the past three months and 14.06% over the past year.
iShares MSCI EAFE Growth ETF (EFG - Free Report)
iShares MSCI EAFE Growth ETF seeks to track the performance of the MSCI EAFE Growth Index that includes securities of companies located in Europe, Australasia and the Far East, whose earnings are expected to grow at an above-average rate relative to the market.
The fund has a basket of 389 securities and has gathered an asset base of $12.18 billion. EFG charges an annual fee of 0.36% and has a dividend yield of 1.53%.
iShares MSCI EAFE Growth ETF has major exposure to the industrials (18.80%), consumer discretionary (16.40%) and information technology (15.74%) sectors, with Japan (22.40%), France (13.68%) and the U.K. (12.51%) being the top three countries where assets of the fund are allocated. The fund has gained 10.65% over the past three months and 16.95% over the past year.
Capital Group International Focus Equity ETF (CGXU - Free Report)
Capital Group International Focus Equity ETF employs an active strategy, exploring opportunities outside the United States, including emerging markets, with a company-by-company-focused strategy that seeks long-term growth of capital.
The fund has a basket of 70 securities and has gathered an asset base of $2.25 billion. CGXU has an annual fee of 0.54% and a dividend yield of 0.93%.
Capital Group International Focus Equity ETF has major exposure to the industrials (18.3%), consumer discretionary (13.7%) and information technology (13.5%) sectors, with Japan (13.3%), India (11.27%) and France (10.85%) being the top three countries where assets of the fund are allocated. The fund has gained 9.11% over the past three months and 13.72% over the past year.
Avantis International Equity ETF (AVDE - Free Report)
Avantis International Equity ETF employs an active strategy, having exposure in a broad set of companies of all market capitalizations across non-U.S. developed countries and is designed to increase expected returns by overweighting securities we believe to be trading at lower valuations with higher profitability ratios.
The fund has a basket of 3,267 securities and has gathered an asset base of $4.19 billion. The fund has an annual fee of 0.23% and a dividend yield of 2.90%.
Avantis International Equity ETF has major exposure to the financials (21%), industrials (19%) and consumer discretionary (12%) sectors, with Japan (22%), the U.K. (13%) and Canada (10%) being the top three countries where assets of the fund are allocated. The fund has gained 6.93% over the past three months and 12.42% over the past year.