Current geopolitical developments might influence the structure of short- and long-term investments, and understanding the workings of these developments is critical for advisors. While dabbling in international waters comes with its own risks, foreign markets may also provide opportunities.
On the upcoming webcast, Geopolitical Impact Creates Investment Opportunities, John Sitilides, Geopolitical Strategist at Trilogy Advisors, and Salvatore Bruno, Chief Investment Officer and Managing Director at IndexIQ, will provide insights on the international market and how shifts in geopolitical currents can present opportunities that a skilled investment approach can potentially capitalize on.
For example, the IQ 500 International ETF (NYSEArca: IQIN) can help investors gain exposure to international markets. IQIN tries to reflect the performance of the IQ 500 International Index, which was developed by IndexIQ and has a live track record dating from 12/31/07. All index components are headquartered outside the U.S. and are made up of common stock. The potential universe of constituent equities is ranked and weighted according to three fundamental factors; Sales, Market Share and Operating Margin. The ETF takes a different approach, looking at key fundamental factors and weighting the portfolio based on key metrics of relative strength and market position.
Additionally, ETF investors interested in foreign market exposure but are also taking a more neutral view on foreign currency movements can consider a handful of 50% hedged/50% unhedged options, including the IQ 50 Percent Hedged FTSE International ETF (NYSEArca: HFXI), IQ 50 Percent Hedged FTSE Europe ETF (NYSEArca: HFXE) and IQ 50 Percent Hedged FTSE Japan ETF (NYS Arca: HFXJ). All three funds have approximately half their currency exposure of the securities in the underlying index hedged against the U.S. dollar on a monthly basis.
Investors who have a more neutral stance on the foreign exchange outlook may consider a 50% hedged international investment as a way to limit volatility in their international exposure due to a sudden currency swing. IndexIQ research has shown that a 50% currency hedged approach can reduce the potential risk of misreading extreme currency movements in either direction and can also have a dampening effect on volatility, which may help investors capture any further upside potential while hedging against downside risks associated with harmful currency moves.
Financial advisors who are interested in learning more about global markets can register for the Tuesday, June 4 webcast here.