The explosion of new active ETFs in the marketplace comes at a time when the investing environment has become more uncertain as 2025 comes to a close. Recent rate cuts, for example, could force investors to recalibrate their portfolios. But all the uncertainty only further supports the case for active management for international exposure.
In addition to the future of interest rate policy, geopolitical risks and inflation remain a prime concern. Of course, a discussion on the markets wouldn’t be complete without the mention of tariffs. Those businesses affected the most by tariffs will continue to assess the current landscape prior to making operational decisions.
“I think businesses are maybe sitting on the sidelines a little bit more waiting for clarity when it comes to investment CapEx, those sorts of decisions,” said Adam Sparkman, client portfolio manager at Thornburg Investment Management. He joined fellow portfolio managers Josh Rubin and Phil Gronniger for a roundtable discussion on current market trends. “And also with the Fed, what inflation is going to look like on a go-forward basis when we’re going to get rate cuts, that level of forward uncertainty about where we’re going. I think that’s causing at least an equal amount of uncertainty.”
The uncertainty surrounding U.S. equities is translating into interest for international equities as U.S. investors look to diversify and minimize their home country bias. The strength in U.S. equities has been primarily driven by tech-fueled names capitalizing on the AI theme. Artificial intelligence is also helping to propel international equities.
“We know the U.S. has really been driven by tech over the last 10 years, kind of at the market level,” Rubin said. “International markets had a headwind from that because international markets have such a bigger component of financials rather than tech. So now in some ways, you actually have international markets, U.S. markets on more even footing. That’s because in both cases, the two largest sectors are doing all right, rather than, you know, one having headwinds while the other one had tailwinds.”
2 Active International Funds
Given the various dynamics affecting international markets, active management becomes imperative when choosing an ETF for international exposure. With that, investors should consider funds like the Thornburg International Equity ETF (TXUE) and the Thornburg International Growth Fund ETF (TXUG).
Both funds use the expertise and experience of Thornburg’s investment management team to navigate the international markets. TXUE is an ideal choice for core international equities exposure. TXUG adds a growth component to exposure.
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