Asian stocks largely posted gains on Thursday, lifting multifactor ETFs, as investors awaited the release of U.S. consumer price data.
Asia-Pacific markets climbed across the board, led by South Korean stocks. South Korea’s Kospi index reached a two-week high on Wednesday, lifted by chip giant Samsung Electronics climbing 2.7%.
Meanwhile, Japan’s Nikkei 225 index ended Wednesday at its highest level in almost two weeks. Chip stocks led this week’s rally in Japan.
Three multifactor ETFs to consider for adding exposure to Japan and South Korea are the Hartford Multifactor Diversified International ETF (RODE), the Hartford Multifactor Developed Markets (ex-US) ETF (RODM), and the Hartford Multifactor Emerging Markets ETF (ROAM).
Under the Hood of Multifactor ETFs
RODM provides exposure to developed non-U.S. equities, with Japan being the largest exposure by weight (19.0%). Conversely, ROAM offers broad exposure to emerging markets equities, with South Korea comprising 12.7% of the fund by weight.
ROAM tilts heavily toward Asia-Pacific stocks. However, compared to emerging markets category peers, the fund notably underweights China — one facet that has led to its outperformance.
RODE provides exposure to both emerging markets and developed non-U.S. equities, with Japan being the fund’s largest country by weight (15.2%). South Korea rounds out the top five countries in RODE, weighted at 5.8%.
As international markets have rallied recently, RODM, RODE, and ROAM are up 3.1%, 3.0%, and 2.9%, respectively, in the past one week.
Advisors can enhance diversification while preparing portfolios for higher volatility by allocating to international multifactor ETFs. Multifactor ETFs seek to target desired return-enhancing factors and reduce exposure to unrewarded risk exposures.
RODM, ROAM, and RODE each seek to reduce volatility by 15% over a complete market cycle.
For more news, information, and analysis, visit the Multifactor Channel.
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