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Christian Hille, Managing Director and Head of Multi Asset for EMEA at Deutsche Asset Management, believed that investors can also diversify their international equity exposure through multi-factor or smart-beta styled investments. These factors include value, high dividends, equal market-cap weights, momentum, minimum volatility and quality.
“Equity style factors exhibit beneficial diversification properties,” Hille said.
For instance, the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF (NYSEArca: DEEF) and Deutsche X-trackers FTSE Emerging Comprehensive Factor ETF (NYSEArca: DEMG) track enhanced beta FTSE Russell indices that target quality, momentum, value, size and volatility – five key factors many financial institutions have looked at to help gain an edge over traditional beta indexing methodologies.
Along with seeing opportunities in currency-hedged and multi-factor strategies, Sean Edkins, Director and ETF Investment Specialist at Deutsche Asset Management, believes international investors should also look at high dividend strategies as yield-generating stocks.
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For example, the Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF (NYSEArca: HDEF) and Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (NYSEArca: HDEE) track high-dividend-yield indices select companies with dividend yields greater than or equal to 1.3 times the yield of the parent index and screen for quality, including return on equity, earnings variability and debt-to-equity. Additionally, the new funds also utilize forward currency contracts to diminish the negative effects of an appreciating U.S. dollar or weakening foreign currencies over the short-term.
Financial advisors who are interested in learning more about international investment strategies can watch the webcast here on demand.