Broadly speaking, ex-US markets continue lagging domestic equities, but there are ways for investors to access quality international ideas with reduced ideas. Enter the Nationwide Risk-Based International Equity ETF (NYSEArca: RBIN).
RBIN seeks to track the total return performance of the Rothschild & Co Risk-Based International Index. The index is a rules-based, equal risk-weighted index that is designed to provide exposure to large capitalization companies in developed markets outside the U.S. and Canada with lower volatility, reduced maximum drawdown, and an improved Sharpe ratio as compared to traditional, market capitalization weighted approaches.
With first-quarter earnings season underway, it could be a rocky ride for U.S. equities investors if weaker-than-expected forecasts come into fruition and result in market sell-offs. However, one way to seek shelter from the proverbial volatility storm could be international developed and emerging markets ETFs.
The international developed-EM space has had its fair share of struggles in years past, but for investors who are still hesitant when it comes to international market exposure, now is the time with a possible trade deal between the United States and China looming as a market catalyst.
Right For RBIN
RBIN’s quality factor often goes overlooked compared to growth and value, but with market volatility still, a primary consideration and many investors favoring defensive sectors, quality stocks, and the related ETFs are worth examining in 2020.
While investors are flocking to safe haven assets like bonds, there’s still a need for products that capture the upside potential should 2020 see a rebound for ex-U.S. equities. At the same time, however, there’s also a need for strategies that offer downside protection built into the product.
RBIN is an alternative to the cap-weighted MSCI EAFE Index. Indicating that it has stringent requirements for admission, the $100 million RBIN holds 232 stocks, significantly less than the MSCI EAFE Index.
RBIN allocates 35.52% of its weight to consumer defensive and industrial stocks and another 25% to healthcare and financial services names.
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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.