The tariff sell-off has taken a big bite out of market value. With clarity lacking about what the Trump administration will do next, investors may be looking at their options. While plenty of options exist, not all are created equal. Many investors are not ready to make a huge shift into fixed income for defensive purposes. At the same time, more defensive equity sectors may not be spared a potential recession.
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Instead, it may be time to consider a turn towards international equities, with an active ETF like TOUS a strong candidate. The T. Rowe Price International Equity ETF (TOUS ) charges a 50 basis point (bps) fee to actively invest in international equities. Holding around 150 firms, the strategy has outperformed the MSCI ACWI Ex USA Net Total Return Index YTD per YCharts data. So, what about the fund makes it worth considering amid the tariff sell0off?
International Diversification
First and foremost, an international equities ETF can diversify away from potential U.S.-focused volatility. While a global trade war will impact firms across the world, some of the worst impact could be felt in the U.S. markets. Given how many U.S. investors are likely facing domestic concentration risk, diversification could prove a big boost.
Per ETF Database analysis, the fund has significant weights to solid ex-U.S. nations like Japan and the U.K. Solid firms from France and Germany, too, add to a list of markets with reliable, durable companies.
Active Flexibility in Tariff Sell-Off Tumult
Of course, simply tracking a static international equities index would not cut it. That’s where the ETF’s active approach comes in. Active strategies can adjust to big events like tariffs. At the same time, active strategies can also empower managers to over or underweight particular firms without having to follow inflexible index holdings. In foreign markets, that can help get a leg up on passive competition while avoiding the worst of tariff sell-off vol.
Fundamental Focus
TOUS leans on T. Rowe Price’s fundamental research capabilities. The firm’s global research platform could help give the fund an edge as more investors look to diversify abroad. By closely scrutinizing foreign companies and investing with a fundamental, bottom-up approach, the strategy doesn’t just toggle on or off weights from an index. It constructs its portfolio brick by brick based on hard analyst work.
Taken together, TOUS can offer one option to add diversification in tariff tumult. As a satellite addition, it could help alleviate some U.S. equity concentration exposure and meet client goals.
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