As investors seek out attractive opportunities in the current market, international ETFs are gaining favor among many.
Europe and other developed-market equities were the top-performing regions during the first quarter, with each benefiting from a weaker dollar. Additionally, policy easing and improvements in sentiment have helped support the EU outlook, according to Fidelity Investment’s Quarterly Market Update.
There are tailwinds for international ETFs despite global economic risks. Non-U.S. developed markets, particularly Europe, are typically more sensitive to interest rate changes. This suggests the region could further benefit from decreasing policy rates. Additionally, in the eurozone, increased fiscal spending on defense, especially in Germany, may boost economic sentiment.
See more: Improve Portfolio Diversification With These ETFs
Finally, international ETFs could continue to benefit from a weaker dollar. A weaker U.S. dollar can positively impact investors holding international ETFs. A weaker dollar increases the value of profits earned in foreign currencies.
Advisors looking to add exposure to international equities may consider the Fidelity Enhanced International ETF (FENI ), the Fidelity International Value Factor ETF (FIVA ), and the Fidelity International High Dividend ETF (FIDI ).
Under the Hood of Fidelity’s International ETFs
FENI invests mainly in stocks in the MSCI EAFE index, a market-cap weighted index that includes mid and large-cap companies in developed market countries, excluding the U.S. and Canada. FENI’s active management utilizes a disciplined investment process to provide exposure similar to the benchmark index while seeking outperformance. The fund charges 29 basis points, a competitive price for active international exposure.
FENI’s largest geographic exposure is currently to Europe (62.27%), followed by Asia (32.60%), as of April 30. Looking at individual country exposures, Japan, the United Kingdom, France, Germany, and Switzerland make up the largest positions in the ETF.
FIVA, which charges 18 basis points, seeks to track the Fidelity® International Value Factor Index. The index includes mid and large-cap developed stocks outside the U.S.
A value approach to international equities, it seeks to identify firms that the market may have mispriced, or that may be trading at a discount. The index’s emphasis on those criteria can allow it to capitalize on market dislocations across its foreign markets.
Like FENI, FIVA offers significant Europe exposure (56.21%), followed by exposure to Asia (31.22%). The fund also includes an 11.42% exposure to North America. In addition to Japan, the United Kingdom, German, and France, the fund also has considerable exposure to Canada, as of April 30.
FIDI also presents a factor approach to international equities, charging 18 basis points. The fund looks for large- and midcap stocks in its stock universe with high dividends. Dividends can help to enhance portfolio income as well as mitigate some volatility. Dividend income may be able to smooth out volatility and provide a steadier return profile.
FIDI also provides exposure to Europe (55.96%), Asia (30.51%), and North America (12.19%) as of April 30. The top country exposure by weight includes Japan, the United Kingdom, Canada, France, and Australia.
For more news, information, and analysis, visit the ETF Investing Channel.
Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.
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