Entering Tuesday, the MSCI EAFE Index sported a 19.1% YTD gain. That’s nearly triple returns posted by the S&P 500. That confirms the strength of international equities this year. Some ETFs dedicated to ex-U.S. stocks have been even better since the start of 2025.
Given the stellar performances delivered by international stocks over a relatively short time frame, some investors may be worried that they missed the party and the easy money has already been made. Some market observers believe otherwise. And there’s talk 2025 could represent the dawn of a new era of lengthy outperformance by ex-U.S. equities.
Should those views prove accurate, ETFs such as the WisdomTree International High Dividend Fund (DTH ), stand to benefit. DTH is already standing out as an alternative to basic broad-based ETFs tracking developed market stocks. The WisdomTree ETF, which excludes Canadian and U.S. stocks, is higher by 23.18% YTD. That’s an advantage of roughly 400 basis points over the MSCI EAFE Index. That’s an impressive level of outperformance when accounting for DTH’s defensive traits.
With DTH, Offense & Defense Intersect
DTH turned 19 years old last month. It follows the WisdomTree International High Dividend Index – a yield-weighted gauge. It’s common for high-dividend strategies to be heavily allocated to defensive sectors. But in the case of DTH, the fund’s utilities exposure is less than 13%. And its combined weight to the other defensive sectors is just 12%.
Despite a relative lack of exposure to high-yielding defensive sectors, DTH doesn’t cheat investors when it comes to income. A distribution yield of 8.21% confirms as much. But the ETF’s lack of reliance on defensive stocks could be ideal for investors looking to get involved with international equities, particularly at a time when the asset class remains under-owned.
“As of May 30, for example, assets in international funds totaled about $4.6 trillion, which is about 26% of the total in US funds and exchange-traded funds (including sector funds). A more balanced weighting would be 62.3% in the United States and 37.7% in international stocks. Those are the current weightings based on the market capitalizations of US and foreign stocks,” noted Morningstar’s Amy Arnott.
Another source of allure with DTH is its value leanings. The ETF allocates more than 42% of its combined weight to financial services and industrials stocks — two traditional value sectors. While international stocks are proving resurgent this year, the group isn’t stretched on valuation.
'US Stocks Trading at Loftier Levels'
“Valuation levels for both US and non-US stocks are trading at a premium to past levels based on most valuation metrics, but US stocks are trading at loftier levels based on most measures,” added Arnott.
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