Furthermore, the bias for outperforming U.S. stocks may also limit an investors overall investment diversification outlook.
“Excessive enthusiasm for fashionable market segments is not the only cause of poorly diversified indices; U.S. stocks often are overrepresented in capitalization-weighted indices, despite their share of the world economy,” LaBella added.
For international exposure, investors can also consider the Legg Mason International Low Volatility High Dividend ETF (BATS: LVHI), Legg Mason Emerging Markets Low Volatility High Dividend ETF (BATS: LVHE), Legg Mason Developed Ex-US Diversified Core ETF (NasdaqGM: DDBI) and Legg Mason Emerging Markets Diversified Core ETF (NasdaqGM: EDBI) to access broad global markets.
“When implemented well, smart beta ETFs can tactically enhance overall portfolio performance while providing real diversification. They should be used to achieve specific, targeted investment goals,” LaBella said.
For more on smart beta ETFs, please visit our Smart Beta Channel.