The concept of investing in European stocks seems difficult to stomach considering the decade of lost returns versus their U.S. counterparts. A new post by Michael Batnick, Director of Research for Ritholtz Wealth Management, details the difficult 10-year journey for this foreign investment class. The U.S. has simply been the star outperformer on the global stage for so many consistent years that the home-bias phenomenon has been taken to a new level.
According to their research, U.S. stocks now make up 80% of the average U.S. investor’s equity portfolio. The remaining 20% is likely split among a variety of European, Asian, and emerging market exposure. This overweight exposure towards a high-flying asset class ultimately leaves many investors susceptible to being caught off guard as the pendulum swings in the opposite direction.
Exchange-traded funds (ETFs) that track international markets started the year with tremendous promise that ultimately lost ground to a host of fundamental concerns. Despite the best efforts of the European Central Bank to stimulate economic growth through quantitative easing programs, both developed and emerging markets overseas have seen momentum vanish in 2015. Read more
The landscape of international investing has become more complex than ever, particularly for ETF investors. The reason for this is actually a good thing – there are now more choices than ever when it comes to varying country, regional, economic development, or currency exposure than ever.
The hottest trend right now is in currency-hedged ETFs that hold a diversified basket of international stocks with short positions in the underlying local currency. Essentially this type of fund is designed as the perfect overseas investing vehicle for a quantitative easing-style world in which the local currency is falling, while equity prices are rising.
In our monthly ETF chart roundup video, we analyze the current trends of the market. The important themes to watch this month are large cap stocks, Europe, energy stocks, consumer discretionary, U.S. dollar, and interest rates. Recorded after the market close on February 5, 2015.
In our monthly ETF chart roundup video, we analyze the current trends of the market. The important themes to watch this month are large cap stocks, Europe, oil prices, treasuries, emerging market bonds, and REITs. Recorded after the market close on January 7, 2015.