The new year may offer plenty of domestic equity upside, but despite that optimism, U.S. investors still face plenty of risks. Specifically, the dominance of several key mega-cap tech names has created some serious concentration risk for investors to deal with. High valuations, too, loom as a risk worth noting and adapting to. Recognizing that, it may be worth investing in foreign equities with an international equity ETF like IDOG.
See more: Biotech Looms as a Way to Beat the Market
The ALPS International Sector Dividend Dogs ETF (IDOG), tracks an equal-weighted index that picks five firms from each of the 10 GICS international sectors. IDOG identifies the five based on their dividend yield for a total of 50 firms from 10 sectors. Given that the strategy looks for firms based on dividend yield, limiting exposure to traditional dividend heavyweight sectors like utilities helps it provide a better, broad view.
International Equity
What sets IDOG apart from your standard international equity ETF, then? That focus on dividends doesn’t just offer income and an extra boost for portfolios, it also provides information. In foreign markets where information may be less available, dividends can signal that a firm has a healthy outlook ahead.
Perhaps most important, however, is the diversification available in IDOG. The international equity ETF offers significant diversification in just one ETF thanks to its enforced allocation to all 10 GICS sectors. While not an equal-weight ETF, IDOG’s approach provides a somewhat balanced allocation to the 10 sectors in addition to that current income.
With foreign equities likely to benefit from some rate cuts of their own, and with the eurozone one key area for cuts to occur, IDOG can appeal. The ETF, which charges 50 basis points, has returned 22.1% YTD. Taken together, it could make for a worthwhile addition to get solid, steady foreign diversification via an international equity ETF.
VettaFi LLC (“VettaFi”) is the index provider for IDOG, for which it receives an index licensing fee. However, [ETF IDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of IDOG.
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