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Diversification Beyond Wall Street: Global ETFs to Consider Now
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Key Takeaways
AI-driven volatility and U.S. market concentration are strengthening the case for global diversification.
Global equity funds have attracted seven consecutive weeks of inflows, signaling rising investor interest.
Global ETFs can help investors reduce U.S. market concentration and diversify across sectors and regions.
Following last week's roller-coaster ride in the markets, during which the AI-led selloff wiped trillions of dollars off market capitalizations, global ETFs are gaining appeal as investors reassess their heavy exposure to U.S. equities and seek opportunities across international markets.
The U.S. equity market has become increasingly top-heavy, leaving the S&P 500 heavily concentrated in technology stocks. The information technology sector accounts for approximately 37.4% of the index's weighting.
Additionally, the case for global diversification is gaining strength amid relatively attractive valuations across several international markets, improving global earnings prospects and growing demand for broader geographic exposure. This growing interest is also reflected in rising inflows into global equity funds, suggesting that investors are increasingly looking beyond U.S. markets for diversification and growth opportunities.
According to LSEG Lipper data, global equity funds attracted net inflows of $38.63 billion in the week ended Nov. 4, marking their seventh consecutive week of inflows, as quoted on Reuters. Notably, investors continued to pour money into these funds even as U.S. and major Asian markets declined amid concerns over rising costs of AI infrastructure investments.
Per the Reuters article, technology-sector funds witnessed a slowdown in demand, with inflows falling to a three-week low. Against this backdrop, the ETFs we have mentioned could merit attention, given their relatively low technology exposure and substantial allocations to financial stocks.
Here’s Why Global Equity ETFs Could Be Worth Considering
In many ways, diversification is no longer just an option but an increasingly important strategy for navigating markets marked by persistent economic uncertainty. International equity ETFs can offer an attractive way to diversify portfolios and reduce overreliance on U.S. markets.
Can Easing AI Fears Boost Global Equity ETFs?
There could be some relief for markets if concerns surrounding AI investments and potential regulatory headwinds begin to ease. Last week's multi-trillion-dollar selloff was driven by investor concerns over increased scrutiny of AI investments following the Democratic Party's sweeping midterm election victory.
As quoted on another Reuters article, President Trump described the risks associated with AI as manageable and signaled his willingness to work with Democrats on potential safeguards.
A more constructive policy outlook could support U.S. equities, with positive spillover effects potentially extending to global markets. This could further strengthen the case for investors to consider increasing their exposure to international equity funds.
Some Key International ETFs
Investors can consider funds like Dimensional International Core Equity Market ETF (DFAI - Free Report) , AvantisInternational Equity ETF (AVDE - Free Report) and Schwab Fundamental International Equity ETF (FNDF - Free Report) .
Financials and industrials are the two largest sector allocations across all the funds, with each fund maintaining double-digit exposure to both sectors. Regarding annual fees, DFAI is the cheapest option, charging an annual fee of 0.18%. The above funds maintain well-diversified portfolios, with no single holding accounting for more than 3% of the portfolio.
Japan, the United Kingdom and Canada are among the top country allocations across the mentioned funds. FNDF is the largest option, with an asset base of $25.94 billion, while DFAI is the most liquid, with a one-month average trading volume of about 1.91 million shares.
International Value ETFs
In addition to providing broader geographic diversification, international funds with a value tilt can offer investors an added advantage in the current market environment. Value investing has become particularly compelling as investors seek companies with strong fundamentals, solid financial health and attractive valuations.
Value ETFs focus on stocks characterized by strong fundamentals and robust financial health, which trade below their intrinsic value. Investors can consider Dimensional International Value ETF (DFIV - Free Report) , Avantis International Large Cap Value ETF (AVIV - Free Report) and iShares MSCI EAFE Value ETF (EFV - Free Report) .
Financials represent the largest sector allocation across all of the above funds, with AVIV having the lowest exposure at 31%. Information technology, on the other hand, represents only a modest share of each portfolio, with AVIV holding the highest exposure at just 4%.
Japan is the largest country exposure across all the funds, followed by the United Kingdom. AVIV is the cheapest option, charging an annual fee of 0.25%. EFV is both the largest and the most liquid fund, with a one-month average trading volume of about 1.71 million shares and an asset base of $31.11 billion.
The above funds maintain well-diversified portfolios, with no single holding accounting for more than 4% of the portfolio.
International Dividend ETFs
Investors can also consider global dividend-focused funds. Dividend-paying securities serve as primary sources of reliable income for investors, particularly during periods of equity market volatility. Companies offering dividends often act as a hedge against economic uncertainty.
Investors can consider iShares International Select Dividend ETF (IDV - Free Report) , Franklin International Low Volatility High Dividend Index ETF (LVHI - Free Report) and WisdomTree International High Dividend ETF (DTH - Free Report) , with dividend yields of 5.74%, 4.58% and 4.01%, respectively.
The aforementioned funds have minimal to no exposure to the information technology sector, with DTH having the highest allocation at 1.08% and LVHI having none. Financials remain the top sector allocation across all of the above funds, with LVHI having the least exposure to the sector at 23.93%.
The funds are also well-diversified, with no single holding accounting for more than 5% of the portfolio. Regarding annual fees, LVHI is the cheapest option, charging 0.40%. Among the mentioned funds, IDV is the largest fund with an asset base of $8.46 billion, while LVHI is the most liquid fund, with a one-month average trading volume of about 1.21 million shares.
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Diversification Beyond Wall Street: Global ETFs to Consider Now
Key Takeaways
Following last week's roller-coaster ride in the markets, during which the AI-led selloff wiped trillions of dollars off market capitalizations, global ETFs are gaining appeal as investors reassess their heavy exposure to U.S. equities and seek opportunities across international markets.
The U.S. equity market has become increasingly top-heavy, leaving the S&P 500 heavily concentrated in technology stocks. The information technology sector accounts for approximately 37.4% of the index's weighting.
Additionally, the case for global diversification is gaining strength amid relatively attractive valuations across several international markets, improving global earnings prospects and growing demand for broader geographic exposure. This growing interest is also reflected in rising inflows into global equity funds, suggesting that investors are increasingly looking beyond U.S. markets for diversification and growth opportunities.
According to LSEG Lipper data, global equity funds attracted net inflows of $38.63 billion in the week ended Nov. 4, marking their seventh consecutive week of inflows, as quoted on Reuters. Notably, investors continued to pour money into these funds even as U.S. and major Asian markets declined amid concerns over rising costs of AI infrastructure investments.
Per the Reuters article, technology-sector funds witnessed a slowdown in demand, with inflows falling to a three-week low. Against this backdrop, the ETFs we have mentioned could merit attention, given their relatively low technology exposure and substantial allocations to financial stocks.
Here’s Why Global Equity ETFs Could Be Worth Considering
In many ways, diversification is no longer just an option but an increasingly important strategy for navigating markets marked by persistent economic uncertainty. International equity ETFs can offer an attractive way to diversify portfolios and reduce overreliance on U.S. markets.
Can Easing AI Fears Boost Global Equity ETFs?
There could be some relief for markets if concerns surrounding AI investments and potential regulatory headwinds begin to ease. Last week's multi-trillion-dollar selloff was driven by investor concerns over increased scrutiny of AI investments following the Democratic Party's sweeping midterm election victory.
As quoted on another Reuters article, President Trump described the risks associated with AI as manageable and signaled his willingness to work with Democrats on potential safeguards.
A more constructive policy outlook could support U.S. equities, with positive spillover effects potentially extending to global markets. This could further strengthen the case for investors to consider increasing their exposure to international equity funds.
Some Key International ETFs
Investors can consider funds like Dimensional International Core Equity Market ETF (DFAI - Free Report) , Avantis International Equity ETF (AVDE - Free Report) and Schwab Fundamental International Equity ETF (FNDF - Free Report) .
Financials and industrials are the two largest sector allocations across all the funds, with each fund maintaining double-digit exposure to both sectors. Regarding annual fees, DFAI is the cheapest option, charging an annual fee of 0.18%. The above funds maintain well-diversified portfolios, with no single holding accounting for more than 3% of the portfolio.
Japan, the United Kingdom and Canada are among the top country allocations across the mentioned funds. FNDF is the largest option, with an asset base of $25.94 billion, while DFAI is the most liquid, with a one-month average trading volume of about 1.91 million shares.
International Value ETFs
In addition to providing broader geographic diversification, international funds with a value tilt can offer investors an added advantage in the current market environment. Value investing has become particularly compelling as investors seek companies with strong fundamentals, solid financial health and attractive valuations.
Value ETFs focus on stocks characterized by strong fundamentals and robust financial health, which trade below their intrinsic value. Investors can consider Dimensional International Value ETF (DFIV - Free Report) , Avantis International Large Cap Value ETF (AVIV - Free Report) and iShares MSCI EAFE Value ETF (EFV - Free Report) .
Financials represent the largest sector allocation across all of the above funds, with AVIV having the lowest exposure at 31%. Information technology, on the other hand, represents only a modest share of each portfolio, with AVIV holding the highest exposure at just 4%.
Japan is the largest country exposure across all the funds, followed by the United Kingdom. AVIV is the cheapest option, charging an annual fee of 0.25%. EFV is both the largest and the most liquid fund, with a one-month average trading volume of about 1.71 million shares and an asset base of $31.11 billion.
The above funds maintain well-diversified portfolios, with no single holding accounting for more than 4% of the portfolio.
International Dividend ETFs
Investors can also consider global dividend-focused funds. Dividend-paying securities serve as primary sources of reliable income for investors, particularly during periods of equity market volatility. Companies offering dividends often act as a hedge against economic uncertainty.
Investors can consider iShares International Select Dividend ETF (IDV - Free Report) , Franklin International Low Volatility High Dividend Index ETF (LVHI - Free Report) and WisdomTree International High Dividend ETF (DTH - Free Report) , with dividend yields of 5.74%, 4.58% and 4.01%, respectively.
The aforementioned funds have minimal to no exposure to the information technology sector, with DTH having the highest allocation at 1.08% and LVHI having none. Financials remain the top sector allocation across all of the above funds, with LVHI having the least exposure to the sector at 23.93%.
The funds are also well-diversified, with no single holding accounting for more than 5% of the portfolio. Regarding annual fees, LVHI is the cheapest option, charging 0.40%. Among the mentioned funds, IDV is the largest fund with an asset base of $8.46 billion, while LVHI is the most liquid fund, with a one-month average trading volume of about 1.21 million shares.