Given their performance during the second quarter despite a challenging market environment, international equity exposure might be something investors want to look at more closely. If international equities can maintain their momentum, it could help funds like the Goldman Sachs MarketBeta International Equity ETF (GSID).
“Following a catastrophic start to the year, international equities rebounded sharply in the second quarter,” a Morningstar article noted. “The bellwether MSCI ACWI ex USA benchmark rose 16.1%, bringing its year-to-date return to a slightly more palatable negative 11.0%. Emerging markets, which suffered a greater decline during the first quarter, regained 18.1% versus a 15.3% increase for international developed markets. Regional performance followed a similar pattern as Latin American, Australian, and European markets rebounded more strongly following larger losses than Asian equities in March.”
GSID seeks to provide investment results that closely correspond, to the performance of the Solactive GBS Developed Markets ex-North America Large & Mid Cap Index. The fund invests at least 80% of its assets in securities included in its underlying index, in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index.
The index consists of equity securities of large and mid-capitalization issuers covering approximately the largest 85% of the free-float market capitalization in developed markets excluding North America.
GSID offers investors the following benefits:
- Broad Market Exposure: Provides efficient and diversified access to approximately 85% of the broad developed markets excluding North America market in one fund. [1]
- Building a Core Position: MarketBeta™ ETFs can be combined with other funds to construct or complete a core portfolio position. Asset allocators can implement views using “market beta” exposures.
- Lower Cost: MarketBeta™ ETFs are competitively priced and are based on market cap-weighted indices which tend to have lower turnover costs.
Furthermore, if international equity investors are looking to gain more concentrated exposure in Europe versus other countries, then GSID fits that requirement. Looking at the fund’s exposure as of July 16, almost 50% of the fund focuses on Europe (excluding the United Kingdom), while about 25% is allocated towards Japan and 13% to the United Kingdom.
Additionally, GSID holds a variety of equities from various sectors for further diversification. Its top five sectors consist of financials, industrials, healthcare, consumer staples, and consumer discretionary.
Top 10 holdings (also as of July 16):
- Nestle SA: 2.4%
- Roche Holding AG: 1.9%
- Novartis AG: 1.5%
- ASML Holding NV: 1.2%
- SAP SE: 1.2
- Toyota Motor Corp: 1.0%
- AstraZeneca PLC: 1.0%
- LVMH Moet Hennessy Louis Vuitton SE: 0.9%
- Sanofi: 0.8%
- AIA Group Ltd: 0.8%
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