The recent U.S. withdrawal from Afghanistan will impact geopolitical considerations in U.S. foreign policy and national security strategy, particularly with our global neighbors from China, Russia, Iran, and the European Union.
In the upcoming webcast, Geopolitical Risks That Could Potentially Impact Portfolios In 2022, John Sitilides, Principal, Trilogy Advisors; and Lauren Goodwin, Portfolio Strategist, New York Life Investments, will discuss the importance of having a geopolitical framework for investing to better understand what these types of shifts mean for your clients’ portfolios.
Investors have several global-themed ETF strategies to choose from to access international markets, 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 relative strength and market position metrics.
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.
Financial advisors who are interested in learning more about global investing can register for the Wednesday, November 3 webcast here.