Does the recipe for exchange traded fund (ETF) investing success lie outside the borders of the United States? Increasingly, experts are stepping forward to add their voice to the chorus of those who believe the answer is yes.
It’s long been known that two-thirds of the world’s market cap lies outside the United States. This means that investors who choose to ignore the rest of the world in favor of U.S. companies might be cutting off a potentially valuable lifeline to their portfolios.
Gary Motyl, chief investment officer of the Templeton Global Equity Group, is among those who remain positive on the chance of a global recovery and a rebound in stocks globally. He told Neil Martin for Barron’s about why he is optimistic on global stocks.
- The numerous stimulus packages introduced by many governments are starting to have an impact upon the economy.
- Historically, valuations remain low, yielding opportunity for the long term, specifically in emerging markets, like Brazil, Russia, China and India (the BRICs)
- Popular sectors include industrials, commodities, technology and semiconductors. Telecommunications look the most attractive.
- Another point we’ll add is that so far, decoupling appears to be active: the S&P 500 is up 2.7% year-to-date; iShares MSCI Emerging Markets (EEM) is up 30.4%
- SPDR S&P World ex-US (GWL): up 6.1% year-to-date
- iShares MSCI EAFE Index Fund (EFA): up 5.4% year-to-date
Watch the trend lines in order to spot the best opportunities for yourself.
For more stories on global ETFs, visit our global ETF category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.