As advisors look to diversify client portfolios, international equity ETFs may be worth consideration.
Diversification should be a key area of focus this year, amid an uncertain economic outlook and potential for uneven market returns after the policy changes implemented by the new administration. Diversifying portfolios with international exposure may help spread out risk.
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 comprised of mid and large-cap companies in developed market countries, excluding the U.S. and Canada. The fund charges 29 basis points, a competitive price for active international exposure.
FENI’s active management utilizes a disciplined investment process to provide exposure similar to the benchmark index while seeking outperformance.
The stock selection process emphasizes traditional factors like quality, growth, momentum, as well as valuation. However, it also incorporates nontraditional factors, including options market data, which provides a more complete evaluation of a security’s excess return potential.
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.
FIDI also presents a factor approach to international equities, charging 18 basis points. The fund looks for large and mid-cap 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.
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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