Ex-US developed markets equities have long tantalized advisors and investors with valuation discounts, but the asset class has had difficulty shedding its laggard status.
That could be poised to change, meaning advisors should consider refined approaches that could offer superior outcomes relative to the MSCI EAFE Index. One consideration is the Developed International Model Portfolio, which is part of WisdomTree’s Modern Alpha Model Portfolios series.
“This model portfolio is designed for investors with a long-term horizon looking for exposure to a broad universe of Developed International equities primarily using factor focused ETFs,” according to WisdomTree. “The selected ETFs provide certain factor tilts that have the potential to generate excess return relative to comparable cap-weighted benchmarks over longer-term holding periods. The strategies may use both WisdomTree and non-WisdomTree ETF.”
Powerful Positioning
The Developed International Model Portfolio has several perks, including a roster that includes small-caps and single-country strategies. Another advantage is quality income with the WisdomTree International Quality Dividend Growth Fund (CBOE: IQDG).
IQDG sets out to capture International Quality Dividend Growth Dividend-paying equities have increasingly become an attractive option for investors looking to generate income and pursue higher total return potential.
Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services, and telecommunications.
Dividends provide an objective measure of a company’s health and profitability – one that cannot be affected by accounting methods or government decisions. The $138.25 million IQDG debuted over four years ago. It excludes U.S. and Canadian equities and allocates over 42% of its combined weight to Japan and the U.K., the former of which offers ample dividend growth potential due to Japanese companies’ strong balance sheets.
Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services, and telecommunications. IQDG’s Japan exposure could prove beneficial to investors in a volatile dividend environment. As a low-yield nation, Japan has the capacity to drive dividend growth.
Japan’s capital inefficiency has been a long-standing problem in Japan. To address this problem of excess cash, which is a good problem to have depending on who you ask, Prime Minister Shinzo Abe has been pushing to improve governance practices.
For more on how to implement model portfolios, visit our Model Portfolio Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
