Importantly, DBES is heavily allocated to markets that are viewed as having compelling valuations relative to the U.S. For example, Japan accounts for over 30% of the ETF’s weight while DBES also features significant exposure to rebounding Eurozone economies.
DBES is conservatively positioned at the geographic level and in the ETF’s just over two years on the market, its volatility traits compare favorably with those found on U.S. small-cap benchmarks.
With earnings growth improving in ex-US developed markets, the time could be right for investors to favor cyclical sectors. DBES obliges on that front with an almost 23% weight to industrial stocks. Cyclical consumer discretionary and technology names combined for almost 28% of the ETF’s roster.
For more on Smart Beta ETFs, visit the Smart Beta Channel home page.