After a decade of U.S. equity market outperformance, it may be time for the developed world to outperform over the next decade. Once one decides to allocate more weight to international stocks, there are a number of important follow-up questions on implementation: Should one invest by region, tilt weight to various size segments, take foreign currency risk?
Whether the reason is slow economic growth, a perception the European Central Bank is engaging in ineffective policy, negative interest rates weighing on banks or the surprising Brexit result and fear of political spillover, one thing is clear: investors haven’t been very positive about European equities in 2016.
Japanese equities face a final hurdle that must be overcome for a positive breakout from the relatively tight (and lackluster) trading range overserved throughout the past six months : Consensus earnings forecasts are bound to be cut significantly in the upcoming results season. In our view, the likely adjustment downward in analyst consensus numbers should be a positive trigger.
Earlier this year, we celebrated the 10-year anniversary of the launch of the first small-cap international ETF in the United States, the WisdomTree International SmallCap Dividend ETF (DLS).
In early January 2016, WisdomTree launched a set of Funds that we consider to be the future of international equity portfolio management: a family of ETFs that incorporate a dynamic element to the management of currency risk.