Many investors have likely entered 2025 feeling positive but also uncertain. Last year saw markets produce significant returns largely riding on just a handful of firms, mostly in tech. While those firms retain a broadly positive outlook this year, with rate cuts still filtering through the economy and deregulation a possible boost, risks do remain. U.S. equity concentration risk. Especially to a handful of mega caps, looms as one possible key risk. Foreign equities can offer both upside and diversification, with an active international equities ETF like TOUS.
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TOUS, the T. Rowe Price International Equity ETF, launched in 2023. This active international equities ETF charges a 50 basis point fee for its approach, which is very competitive in the active international space. The fund generally invests in large-cap companies from developed international regions, but with some allowance to also look down cap and in some smaller markets. Specifically, the ETF holds about 150 stocks with quality business models and good valuation metrics. TOUS applies a fundamental bottom-up approach to portfolio construction to seek both economic and regional diversification.
Together, that has helped TOUS return 23.6% over the last one-year period, per T. Rowe Price data as of September 30, 2024. The strategy may present an intriguing entry point right now, per YCharts data. According to the ETF’s tech chart, the strategy may be entering “oversold” territory, possibly due to international being out of favor. Its Relative Strength Index dipped below 30, the oversold indicator, in recent weeks and remains close to that level. That may suggest that TOUS could be offering a solid entry.
What positive trends, then, can investors look to when considering foreign diversification? In Japan, for example, T. Rowe Price’s research in the firm’s 2025 Global Market Outlook identified improving wages as a growth driver in 2025. Together, TOUS offers active adaptability and a fundamental approach that could appeal to investors. Its flexibility, leaning on the firm’s global research resources and expertise, can help it differentiate itself from less adaptable, passive options.
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