The U.S. election has consumed our attention, making it easy to lose sight of what’s going on around the rest of the world. And, the rest of the world is managing its own set of crises—creating both risks and opportunities. Therefore, monitoring geopolitical risks and international exposure has never been more important—especially when attempting to maintain a resilient portfolio.
In the upcoming webcast, Geopolitical Risk: Elections, Lockdowns, and Continual Disruptions, John Sitilides, Geopolitical Strategist, Trilogy Advisors; and Lauren Goodwin, Portfolio Strategist, New York Life Investments, will discuss the importance of a geopolitical framework for investing to help you better understand what these geopolitical shifts mean for your clients’ portfolios.
To access these international markets, investors have a number of global-themed ETF strategies to choose from, such as the IQ 500 International ETF (NYSEArca: IQIN). 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 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). This fund has approximately half its 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 further upside potential while hedging against downside risks associated with harmful currency moves.
The IQ Candriam ESG International Equity ETF (IQSI), which incorporates CANDRIAM’s industry-leading ESG research and data for the first time in a cost-effective ETF wrapper, can also help investors focus on environmental, social, and governance, or ESG, factors. CANDRIAM’s proprietary ESG evaluation process includes a dedicated ESG research team, which reviews companies on environmental, social, and governance considerations, either in absolute terms or relative to their peers in each sector, focusing on the most material ESG factors.
Financial advisors who are interested in learning more about positioning in this new political environment can register for the Thursday, December 3 webcast here.