It’s no secret by now that one of the bigger winners for January has been foreign equities. Investors have been put off by concerns around overvalued U.S. equities, rising rates, and the potential for an earnings recession this year in the American market. That has drawn investors to look overseas for opportunities, with one strategy worth considering the quality international equities ETF from American Century, the American Century Quality Diversified International ETF (QINT).
Foreign large blend ETFs have added $3.7 billion in the last month according to YCharts, returning 8.5% in that time. That outperformed categories like small and mid-cap value ETFs, as well as some bond categories from the much-vaunted fixed income rebound like long-term and emerging markets bonds.
Investors have been preferring international to U.S. equities over the last few months, with international stocks expected to deliver a “superior return” compared to the S&P 5000 over the next few market cycles according to UBS’ CIO. That international look for investors also includes European stocks, with investors jumping into securities there at the fastest pace in almost a year. Foreign markets themselves may have benefitted from hits to their valuations last year, too, adding to their appeal this year.
As such, investors may want to consider an ETF that focuses on quality international equities such as QINT. QINT tracks the American Century Quality Diversified International Equity Index, which includes large and mid-cap global stocks outside of the U.S. with sound financials, growth prospects, and attractive fundamentals. QINT looks to less-volatile firms and moves between growth and value looks as needed.
QINT charges 39 basis points for its exposures, diversified with no one firm weighted more than 1.6% in its holdings. It has outperformed its ETF Database Category Average and its Factset Segment Average over the last one month, returning 7% in that time compared to 6.6% and 6.3% respectively.
Investors may be interested in dipping their toes abroad given how the start of the year has gone, and with challenges looming for the U.S. market in the form of a possible recession and rising rates. Those investors may want to watch an ETF like QINT as one candidate to consider in the weeks to come.
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