After a rough 2022, some investors are eying international equities to make up for their losses. Not only are many of the world’s most competitive companies trading at bargain-basement prices, but some strategists believe that global stocks are poised to rally. While U.S. stocks are estimated to return 5% to 6.7% over the next 10 years, some strategists think that annualized returns for developed and emerging markets equities for the next decade could go as high as 9%.
“Stocks in Europe and emerging markets are cheap compared to those in the U.S., but that’s not the only draw,” according to Barron’s. Diverging monetary policy and economic backdrops, as well as investors having little allocated abroad, could set up international stocks relatively well for 2023, especially if the dollar’s strength wanes in coming months.”
Per the Financial Times, analysts at Barclays noted that unlike the U.S., “Europe appears to be in a sweet spot right now,” adding: “Disinflation hopes have pushed yields lower despite a hawkish ECB, and improving economic sentiment due to falling energy prices and China reopening has pushed up equities.”
For investors wanting to add international equities exposure to their portfolios, Xtrackers has a suite of ETFs specializing in overseas investing. Among them are the Xtrackers MSCI All World ex U.S. Hedged Equity ETF (DBAW ), the Xtrackers MSCI EAFE Hedged Equity ETF (DBEF ), and the Xtrackers MSCI Emerging Markets Hedged Equity ETF (DBEM ).
DBAW seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI ACWI ex USA U.S. Dollar Hedged Index. The Index is designed to provide exposure to equity securities in developed and emerging stock markets (excluding the U.S.), while at the same time mitigating exposure to fluctuations between the value of the U.S. dollar and selected non-U.S. currencies.
DBEF, meanwhile, seeks investment results that generally correspond to the performance of the MSCI EAFE US Dollar Hedged Index, which is designed to track developed market performance while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the developed economies included in Europe, Australasia, and the Far East.
For investors seeking the same currency hedging strategy with emerging markets, there’s DBEM. This fund seeks investment results that correspond generally to the performance of the MSCI EM US Dollar Hedged Index. Using an indexing investment approach, the fund seeks investment results that correspond generally to the performance, before fees and expenses, of the underlying index, which is designed to track emerging market performance while mitigating exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the underlying index.
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