As investors and advisors build a well diversified portfolio, one should also consider international stocks and exchange traded funds to potentially enhance returns.
On the upcoming webcast, Sourcing Growth in a Growth-Starved World, Ted Lucas, Managing Partner and Investment Committee Chairman for Lattice Strategies, and Darek Wojnar, Managing Director and Investment Committee Member for Lattice Strategies, will make the case for harnessing attractive valuations in global equities and potentially generate improved risk-adjusted returns.
Lattice Strategies is a recent entrant in the ETF space with three international stock fund offerings that follow alternative or smart-beta indexing methodologies. [Lattice Strategies Enters ETF Space With Three Funds]
For starters, the Lattice Developed Markets (ex-US) Strategy ETF (NYSEArca: RODM) offers diverse exposure across international economies outside the U.S. Specifically, RODM tries to reflect the performance of the Lattice Risk-Optimized Developed Markets (ex-US) Strategy Index, which tracks companies in developed markets of Europe, Canada and the Pacific Region. In contrast, traditional developed market EAFE index funds exclude Canada exposure.
Additionally, RODM will try to improve risk and return potential relative to cap-weighted benchmarks by focusing on deliberate risk allocation, diversification and enhanced return potential. The underlying benchmark tries to limit volatility and drawdown risk. The ETF may also offer greater diversification benefits by de-concentrating country, currency and individual company risks. Lastly, the fund may generate better risk-adjusted returns by focusing on companies with improved value, momentum and quality.
RODM has smaller country tilts toward major developed markets like Japan, U.K., France and Switzerland than traditional Europe, Australasia and Far East Index Funds. However, the Lattice ETF includes a 11.2% tilt toward Canada. Individual holdings are also less top heavy in the smart-beta index ETF.
Additionally, investors may find two other multi-factor index ETFs for international exposure, including the Lattice Emerging Market Strategy ETF (NYSEArca: ROAM) and Lattice Global Small Cap Strategy ETF (NYSEArca: ROGS).
Due to its indexing methodology, ROAM has a more spread out exposure to emerging markets. Specifically, the ETF has a much lower tilt toward China, South Korea and Taiwan than the MSCI Emerging Markets Index. China at 7.5% is only the fourth largest country in ROAM’s underlying index. Meanwhile, Taiwan is 9.1% and South Korea is 8.9%.
Lastly, ROGS tries to track global small-cap stocks from both developed and emerging markets, including a 38.8% tilt toward the U.S., Japan 12.5%, South Korea 6.2%, China 6.1% and Canada 4.7%. [Lattice Adds Fourth ETF With Global Small-Cap Fund]
Financial advisors who are interested in learning more about overseas opportunities can register for the Wednesday, December 3 webcast here.