Why You Shouldn’t Abandon International Equity Investing: A Deeper Look into Recent Market Trends
In the world of finance, it’s easy to get caught up in the latest market trends and headlines. However, it’s essential to take a step back and analyze the bigger picture before making any hasty decisions. This is especially true when it comes to international equity investing, which has seen a 4.5% rally in the past week.
Annual Returns Analysis: A Closer Look at Mutual Funds and ETFs
– Annual returns from a variety of mutual funds and ETFs across international and emerging markets have shown surprisingly good 1-year returns.
– These returns are even more impressive considering that international equity investing has been largely ignored for the past 15-18 years.
– When we look at international 3-year returns, we see a promising trend that suggests potential growth opportunities in this asset class.
US Indices Comparison: Highlighting the Value of International Equity
– By comparing US indices and their rolling annual returns, we can see a notable discrepancy between the 10-year and 15-year annual returns of US indices and international equity indices, mutual funds, and ETFs.
– This disparity presents an intriguing opportunity for investors looking to diversify their portfolios and potentially capitalize on international market growth.
Insights from JPMorgan’s International Portfolio Manager
– JPMorgan’s international portfolio manager recently held a lunch in Chicago, where discussions around the current state of international equity returns took place.
– The team acknowledged that 10 and 15-year international equity returns are at historically low levels, sparking interest in the potential for future growth in this asset class.
– Reflecting on past market cycles, such as the tech market top in 2000, we can see how rotations into undervalued asset classes, like international equities, can lead to significant gains for investors.
Conclusion: The Case for International Equity Investing
– Despite the lack of interest in the international asset class, there are compelling reasons to consider maintaining a position in this underperforming segment of the market.
– Capital flows may still be subdued in international markets compared to mega-cap US stocks, presenting an opportunity for forward-thinking investors.
– Diversifying international equity positions, such as with funds like JFEAX or Oakmark International, can help mitigate risk and take advantage of emerging market opportunities.
Remember, in the world of investing, it’s not just about risk vs. reward but also about correlation. By diversifying your portfolio and staying disciplined in your investment strategy, you can position yourself for long-term success.
Disclaimer: The information provided is for educational purposes only and should not be construed as financial advice. Past performance is not indicative of future results, and investors should conduct their own research before making any investment decisions.
Thank you for reading and happy investing!