Broad-based international equity benchmarks turned in decent showings last year. But those gauges lagged the S&P 500, giving investors little reason to trim their U.S. bias.
2024 could be be the year in which international stock indexes keep pace with or even surpass domestic counterparts. With valuations low in many emerging markets and in much of the ex-U.S. developed world, there’s a case for nibbling at international stocks and related ETFs this year. But market participants should be selective about how they do so.
Enter the WisdomTree International Equity Fund (DWM ). It tracks the WisdomTree International Equity Index, and could be a solid avenue for investors seeking international equity diversification in 2024 if the ETF lives up to its established track record. Over the past three years, DWM beat the MSCI ACWI ex USA IMI Index by a margin of better than 5-to-1.
International ETF DWM Methodology & Roster Matter
DWM’s underlying index is dividend-weighted. It excludes Canadian stocks, which are often highly correlated to U.S. counterparts. As such, the WisdomTree ETF can potentially deliver more diversification than rival funds with Canada exposure.
DWM’s emphasis on dividends enhances the ETF’s quality purview. But it also implies it’s home to some companies with wide moat advantages. That’s confirmed by Morningstar’s recently released list of the best 31 international stocks to own in 2024, plenty of which are DWM member firms. That list was confined to names with U.S. listings.
European pharmaceutical giants Roche Holding AG and GSK are among the DWM holdings that made the Morningstar rankings as the best international stocks to own this year. Both fit the bill as low volatility, high-quality fare with the balance sheets required to maintain and grow payouts.
“We think Roche’s drug portfolio and industry-leading diagnostics conspire to create maintainable competitive advantages. As the market leader in both biotech and diagnostics, this Swiss healthcare giant is in a unique position to guide global healthcare into a safer, more personalized, and more cost-effective endeavor,” noted Morningstar analyst Damien Conover.
Other DWM holdings Morningstar’s list include Nestle, Novartis, Astrazeneca Plc, Diageo, and BAE Systems. DWM holds nearly 1,050 stocks. None of them exceed a weight of 1.73%.
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