Is the global economic picture brighter than investors might have previously thought? Japan’s central bank recently ended its negative interest rate policy, while its U.S. and U.K. peers are sending dovish signals. Eurozone business activity rose last week, too. While China remains a tough spot, overall, positive global economic news may speak to the case for a global active ETF like the T. Rowe Price International Equity ETF (TOUS).
See more: T. Rowe Price’s Coyne on Active ETFs in 2024
TOUS charges a 50 basis point fee for its approach, which is competitive for a research-driven actively managed international ETF. The strategy holds firms with quality business models, good valuations, and high earnings potential. In doing so, it considers both local market inputs and macroeconomic factors. Applying a fundamental, bottom-up approach, it primarily focuses on developed, non-U.S. nations.
The ETF has returned 5.5% YTD and 6.3% over the last three months. That has helped it outperform both its ETF Database Category and FactSet Segment averages. Despite only launching last June, it has outperformed and is nearing $100 million in AUM. What’s more, the strategy sends a positive signal via its tech chart: Its price sits well above its 50-day simple moving average, suggesting strong momentum.
Given resilience, particularly in the U.S. economy, why look abroad? While U.S. investing has dominated since the global financial crisis, that dominance is not set in stone. Indeed, adopting a broader view amid positive global economic news could boost portfolios with returns and diversification.
That’s where an active ETF like TOUS comes in. Thanks to its active approach, the strategy can move nimbly and adapt to foreign events. Its experienced managers, using the above strategy, can overweight more intriguing firms while avoiding unworthy index darlings. Taken together, an active ETF like TOUS provides a strong option for investing internationally.
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