Are you considering options for diversifying your portfolio? With the economic outlook changing significantly since the start of the year amid growing rate uncertainty, investors may want some options outside of U.S. equities. For those considering strategies on the 60 side of the 60/40 split, an active non-U.S. ETF may appeal.
A strategy like T. Rowe Price International Equity ETF (TOUS), for example, provides one key example of active’s benefits to investing abroad. Why look abroad? While the U.S. economy has resisted a slowdown over the last two years or so, producing some stubborn inflation, many foreign countries have already finished their rate cycles.
That has positioned several foreign central banks on the precipice of rate cuts. Those cuts—and dynamism in formerly written-off economies like Japan’s—speak to the case for investing abroad. An active non-U.S. ETF could offer an even better option compared to a simple passive indexing tracking fund. For one thing, an ETF provides more transparency and tax advantages than a mutual fund.
An active strategy within that wrapper adds flexibility and ongoing deep research. Given that foreign investing can lack information, leaning on active managers with significant experience and vast resources can help.
TOUS presents one option for investors looking at that type of strategy. The active non-U.S. ETF charges 50 basis points for its approach, which is very competitively prices in it’s category. It holds approximately 150 stocks from firms with strong business models and high earnings potential.
Its managers consider macroeconomic and local market inputs as part of their process on top of a fundamental, bottom-up approach. Taken together, its ETF advantages and active approach have helped to produce a 10.6% return since it’s inception in June 2023 (through Q1 2024), per T. Rowe Price data.
For more news, information, and strategy, visit the Active ETF Channel.
Read more on ETFTrends.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
