With the expectation of Federal Reserve rate cuts to come this year, global central banks could also follow suit. This could pave the way for international equities to run higher, giving investors upside while also getting diversified exposure.
“Adding international exposure is one of the first steps toward a diversified portfolio,” said Morningstar portfolio strategist Amy Arnott.
When looking at the vast universe of opportunities in such equities, investors may not know exactly where to start. ETFs can offer investors a basket of equities. And when used in tandem with an active management strategy, equities are essentially handpicked by experienced market professionals who understand the nuanced behavior of international markets.
That said, one fund to consider is the Avantis All International Markets Equity ETF (AVNM ). The ETF is essentially a fund of funds. It provides exposure to the following five Avantis ETFs. They are the Avantis International Small Cap Value ETF (AVDV ), Avantis International Large Cap Value ETF (AVIV ), Avantis Emerging Markets Value ETF (AVES ), and Avantis Emerging Markets Equity ETF (AVEM ).
AVNM gives investors exposure to a broadly diversified set of companies and sectors across developed and emerging market countries. It focuses on holdings that can provide higher expected returns. Its active management component means the fund incorporates effective portfolio management that seeks to enhance returns, mitigate risks, and reduce costs associated with international equities. It does all this with a low net expense ratio of 0.31%.
International Exposure With a Value Slant
Discerning investors may also want international exposure, but also a value screener to identify equities with strong fundamentals. For a value slant, consider the Avantis All International Markets Value ETF (AVNV ).
The fund also offers exposure to a diversified set of companies in various business sectors. Like AVNM, the ETF invests in developed as well as emerging markets, combining stability with growth while using a more value-oriented screening approach. The prime difference is that AVNV focuses on companies trading at lower valuations with higher profitability ratios.
Also like AVNM, the fund is essentially a fund of funds with exposure to three specific Avantis ETFs: AVDV, AVIV, and AVES. The fund carries a cost-effective net expense ratio of 0.34%.
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