Large caps dominated in 2023. But as investors continue to seek opportunities in 2024, international equities could be extending last year’s rally.
After the downward pressure of 2022, large caps roared back in 2023, highlighted by the big tech comeback. Seven stocks stood head and shoulders above the rest. Those are Amazon, Apple, Alphabet, Microsoft, Meta, Nvidia, and Tesla.
As Forbes confirmed, “the big story of 2023 was the concentrated outperformance of the Mag 7 stocks.” 2024 will pave the way for opportunities in other market caps. “In 2024, the likely theme will be the broadening out of participation to encompass the less engaged parts of the stock market such as Value stocks and Small and Mid-Caps”
Along with small and midcap equities could be dominance in international equities. As eyes remain fixated on the Federal Reserve and how it implements rate cuts this year. Other central banks from around the globe could follow suit. That could result in upside for their respective country’s stocks. Furthermore, international equities could be offering relative value versus their U.S. counterparts.
“On the surface, international stocks remain a relative bargain to their domestic counterparts, trading at a P/E multiple around 12x forward earnings, roughly where they began 2023,” Forbes added. “The European Central Bank looks poised to follow the US Fed’s lead in gradually lowering interest rates. But the Eurozone has fundamental challenges in managing inflation across a diverse coalition of member nations.”
Currently, there’s a push/pull dichotomy of global equities and their response to the Fed. So an all-markets strategy might be an option. With its active management for market flexibility and global exposure for diversification, investors may want to consider the Avantis All Equity Markets ETF (AVGE).
An ETF of ETFs
With its fund of funds structure, AVGE provides exposure to 14 holdings. Avantis ETFs that can provide investors with the global exposure they seek.
Top five holdings include the following ETFs:
- Avantis U.S. Equity ETF (AVUS) = Invests in a broad set of U.S. companies across all market capitalizations. It aims to increase expected returns by overweighting securities believed to be trading at lower valuations and with higher profitability ratios.
- Avantis U.S. Large Cap Value ETF (AVLV) = Invests in a broad set of U.S. large cap companies. It focuses on companies trading at low valuations with higher profitability ratios for a value slant.
- Avantis International Equity ETF (AVDE) = Invests in a broad set of companies of all market capitalizations across non-U.S. developed countries. It aims to increase expected returns by overweighting securities trading at lower valuations with higher profitability ratios. The obvious tilt is toward value while maintaining the diversity of international exposure.
- Avantis Emerging Markets Equity ETF (AVEM) = Invests in a broad set of companies of all market capitalizations across emerging market countries. It aims to increase expected returns by overweighting securities believed to be trading at lower valuations with higher profitability ratios
- Avantis International Large Cap Value ETF (AVIV) = Invests in a broad set of non-U.S. developed large cap companies. It aims to increase expected returns by focusing on companies trading at low valuations with higher profitability ratios.
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