One asset class entering the limelight as 2020 draws to a close is international equities, a group many investors are looking to re-allocate to in the new year.
Advisors can tap into that theme with the WisdomTree Developed International Multi-Factor Model Portfolio.
“This model portfolio is designed for investors with a long-term horizon looking for exposure to a broad universe of Developed International equities primarily using factor focused ETFs,” according to the issuer. “The selected ETFs provide certain factor tilts that have the potential to generate excess return relative to comparable cap-weighted benchmarks over longer-term holding periods. The strategies may use both WisdomTree and non-WisdomTree ETFs.”
While the U.S. election consumed our attention, it became easy to lose sight of what’s going on around the rest of the world, which is managing its own set of crises, creating both risks and opportunities.
The IQDG ETF that Spans the World
One of the key cogs in this model portfolio is the WisdomTree International Quality Dividend Growth Fund (IQDG ). IQDG sets out to capture International Quality Dividend Growth Dividend-paying equities, which have increasingly become an attractive option for investors looking to generate income and pursue higher total return potential.
Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services, and telecommunications.
IQDG is trouncing the MSCI EAFE Index this year and following its recent rebalancing, the fund could be poised for more upside in 2021.
“Fundamentals after our rebalance show a significant increase in quality metrics. ROA improves from 8.77% to 10.31%, and ROE improves over 500 bps from 21.51% to 26.74%,” according to WisdomTree research. “Along with improved quality metrics, the post-rebalance basket shows higher implied growth as measured by the earnings retention rate times the ROE.”
The fund has also trimmed exposure to some dividend-offending countries, including Australia and the U.K., while increasing weights to higher quality destinations, such as Switzerland and Taiwan.
Adding to IQDG’s allure is a 20% weight to Japan, where balance sheets are tidy and stocks are ripping higher to close out 2020.
For more on how to implement model portfolios, visit our Model Portfolio Channel.