A multifactor emerging markets ETF has the potential to reduce volatility while outpacing traditional cap-weighted benchmarks.
There are many benefits to challenging home country bias. In addition to helping diversify portfolios, emerging markets currently present more compelling opportunities than the U.S. on a valuation basis.
Not only are international stocks trading at more attractive multiples than U.S. stocks, but they are also currently cheaper than they’ve been 75% of the time over the past 30 years, according to Hartford Funds.
ROAM Outperforms Over Various Durations
The Hartford Multifactor Emerging Markets ETF (ROAM) stands out among peers in the emerging markets category as it has handily outpaced the emerging markets benchmark over various periods. Year to date as of June 22, ROAM has climbed 10% while the MSCI Emerging Markets index has gained 6.1%.
The return gap is even more pronounced over longer durations. Over one year, ROAM is up 11.4% while the benchmark is up 4.3%. Over three years, ROAM has climbed 23.7% and the benchmark has increased 8.9%, each on a total return basis.
Todd Rosenbluth, head of research at VettaFi, said many advisors steer clear of emerging markets equities for clients on concerns about volatility. “But there are some fundamentally focused ETFs that provide exposure to the style in a lower risk manner,” he added.
A multifactor emerging markets ETF like ROAM can target lower volatility securities. ROAM offers broad exposure to emerging market equities while also seeking to reduce volatility by targeting a 15% volatility reduction over a complete market cycle.
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This article was prepared as part of Hartford Funds paid sponsorship with VettaFi. Hartford Funds is not affiliated with VettaFi and was not involved in drafting this article. The opinions and forecasts expressed are solely those of VettaFi. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, a recommendation for any product, or as investment advice.