As investors look for ways to diversify their portfolios with the markets recovering from the fall out last year, people should consider international stocks and related exchange traded funds for their cheap valuations and potentially attractive yields.

“Following Q4’s steep losses, depressed valuations and sentiment readings set the stage for a broad January equity rebound. Gains extended to both developed and emerging markets with markets from the US to Europe and Asia all rallying sharply. Positive catalysts included dovish Fed policy guidance, Q4 earnings that largely exceeded low expectations globally, hopes for easing US-China trade tensions and a soft Brexit,” Alec Young, managing director, global markets research, FTSE Russell, said in a note.

FTSE Russell and Franklin Templeton Investments pointed out that a broad collection of developed global markets including Japan, Germany, Switzerland, South Korea, Canada, the UK and Europe experience positive returns in January after the volatile market conditions last year, particularly in December. This rebound has occurred broadly in emerging markets as well.

“Looking ahead, international equities boast a lower valuation profile than US stocks with the FTSE Europe, FTSE Japan and FTSE Emerging Indexes sporting 12-month forward PE ratios of 12,7X, 11.8X and 11.7X vs, 16X for the Russell 1000 Index. In addition, income-oriented investors should note that foreign stocks also sport a dividend advantage with the FTSE Europe, FTSE Japan and FTSE Emerging Indexes yielding 3.4%, 2.5% and 3.3% vs. only 2% for the US Russell 1000 Index,” Young added.

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