Global markets and stock exchange traded funds pushed to a new record on Monday as investors gauged the economic recovery outlook against the spreading coronavirus Delta variant and looked toward the upcoming earnings season.
The earnings season is poised to kick off this week. The equity markets have risen sharply over the past year on expectations that corporate profits would rebound once the pandemic ends. Without strong corporate profits, it will be harder to justify these lofty stock prices and record market valuations.
Meanwhile, investors are also watching the Covid-19 Delta variant after the spread of new infections. On Monday, the World Health Organization warned that the infectious Delta variant was growing dominant, and many countries don’t have enough vaccine doses to protect their health workers.
“Sentiment in equities remains bullish, but the Delta variant is a headwind for that. There’s an ongoing concern, what if reopening is difficult to do?” John Roe, head of multiasset funds at Legal & General Investment Management, told the Wall Street Journal.
Investors interested in international markets can consider ETF strategies for foreign exposure. For example, the Avantis International Equity ETF (AVDE) is built upon an academically supported, market-tested framework to identify securities with expected high returns based on market prices and other company information. Relying on trading and portfolio management processes, the Avantis team analyzes whether the perceived benefits of a trade overcome its associated costs and risk. AVDE primarily invests in a diverse group of companies of all market capitalizations across non-U.S. developed market countries, sectors, and industries, emphasizing investment in companies believed to have higher expected returns.
Additionally, the American Century Quality Diversified International ETF (NYSEArca: QINT) utilizes the American Century Investments Intelligent Beta methodology, which systematizes many of the same attributes that fundamental research and security selection seek to identify in a rules-based, indexed approach. QINT is a large foreign blend fund that seeks to enhance core international exposure. Its rules-based approach analyzes each stock’s quality, growth, and value characteristics to select individual securities. It also dynamically adjusts exposures to take advantage of prevailing market conditions.
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