The year 2019 was a great one for Wall Street but other corners of the globe did not return in that stellar fashion. Trade war fears, a slowdown in activity and political crisis have weighed on foreign stocks occasionally and led them to trail the U.S. Index S&P 500 (read:
Top Foreign ETFs of 2019).
However, the announcement of the phase-one U.S.-China trade deal in the fourth quarter finally offered a big boost to global equities. To add to this, there was the easy money policy. To abate growth concerns, a great cycle of global easing has been set in motion. Australia, New Zealand, India, Turkey, Thailand, South Korea, Indonesia, Brazil, Mexico, South Africa, Malaysia and even the Fed and ECB have been pursuing easy money policies.
At least 20 out of 32 central banks that Morgan Stanley tracks are
currently cutting interest rates with more easing on the horizon. Other key central banks like the Bank of Japan have been maintaining an ultra-easy monetary policy, if not slashing further. A wave of cheap money inflows in international markets has finally resulted in foreign equity rally. Some strategists have been betting big on international stocks for 2020. U.S. stocks, in general, outperformed foreign stocks in the past five years with the S&P 500 gaining 144.2% versus 66.5% gains in the Schwab International Equity ETF SCHF. This probably has made international stocks’ valuation more compelling than the U.S. ones.
Also, the IMF recently flagged concerns about U.S. economic growth, which is expected to slide to 2% in 2020 from an expected 2.3% growth rate in 2019. On the other hand, among advanced economies, Euro area is expected to see an uptick in GDP in 2020 at 1.3% from a 2019 expected growth rate of 1.2%. A one-bp uptick in growth rate is also expected for the U.K. economy at 1.4% for 2020.
Emerging Market and Developing Economies are projected to have grown 3.7% in 2019, and are expected to
expand 4.4% in 2020 and 4.6% in 2021, per IMF(read: Economic Slowdown in 2020? ETF Strategies to Help You).
Against this backdrop, below we highlight a few international ETFs that have topped not only the foreign markets but also the S&P 500 (up 2.93%) this year (see
all world ETFs here). First Trust Dow Jones International Internet ETF FDNI – Up 5%
The underlying Dow Jones International Internet Index is a float-adjusted market capitalization weighted index designed to measure the performance of the 40 largest and most actively traded non-U.S. international companies in the Internet industry that are engaged in Internet commerce and Internet services. The fund charges 65 bps in fees.
Renaissance International IPO ETF IPOS – Up 4.6%
The underlying Renaissance International IPO Index is a stock market index based upon a portfolio of non-U.S.-listed newly public companies, prior to their inclusion in global core equity portfolios. Adyen (10.3%), Meituan-Dianping (9.7%) and Xiaomi (9.7%) are the top three holdings of the fund. The 45-stock fund charges 80 bps in fees.
AdvisorShares Dorsey Wright ADR ETF ( AADR Quick Quote AADR - Free Report) – Up 3.8%
This ETF is active and does not track a benchmark. Galapagos Nv-Spon Adr, Nice Ltd, Cosan Ltd-Class A Shares, Mercadolibre Inc and Argenx SE – ADR hold top five spots in the fund. The expense ratio of the fund is 1.10%.
Alpha Architect International Quantitative Momentum ETF IMOM – Up 3.4%
The underlying Alpha Architect International Quantitative Momentum Index uses a 5-step, quantitative and rules-based methodology to identify a portfolio of approximately 40-50, non-U.S. equity securities with positive momentum. Avast Plc, Fortescue Metals, Magellan Financial, Lasertec Corp and London Stock Exchange are the top five holdings of the fund.
First Trust International Equity Opportunities ETF FPXI – Up 3.4%
The underlying IPOX International Index is a rules-based, market-cap weighted index that measures the performance of the 50 largest and typically most-liquid companies that are domiciled outside the United States within the IPOX Global Composite Index. The fund charges 70 bps in fees.
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