Global Equity ETFs Draw Rising Investor Interest

Given the current economic backdrop, increasing exposure to global equities can be a sound strategy. The S&P World Index, which tracks the performance of stocks from 24 developed economies, has risen 19.8% over the past year and 4.53% quarter to date.The legal uncertainty surrounding the tariffs imposed by the Trump administration, a weakening greenback, and economic and political uncertainty are turning investors away from U.S. assets, driving them to diversify beyond the U.S. markets.Per data from LSEG Lipper, as quoted on Reuters, global equity funds attracted $10.65 billion in net inflows, marking the biggest weekly purchase since Aug. 13. Below, we have highlighted a few key drivers behind the inflows into global equity funds.Fed Rate Cuts Fuel Global Equity AppealWith a September rate cut almost certain, expectations of additional Fed easing later this year are adding to the appeal of global equities. Per the Reuters article, global equity funds saw their strongest inflows in three weeks through Sept. 3, fueled by rising expectations of a Fed rate cut this month.Markets are certain that the Fed will proceed with rate cuts in September, October and December, with the CME FedWatch tool showing a 100% chance of cuts in October and December.Weak Greenback Favors Global EquitiesA weakening greenback is further fueling interest in global equity funds. The greenback's value tends to move inversely with interest rate adjustments by the Fed. Interest rate cuts by the Fed make the U.S. dollar less attractive to foreign investors, as this weakens it.According to TradingView, the U.S. Dollar Index (DXY) has fallen 0.69% over the past five days and 10.18% year to date.Diversification Through Global ExposureA recent warning by Goldman Sachs has heightened the concerns of a growing AI bubble. While investing in the technology sector offers exposure to AI’s growth potential, it also brings concentration risks and possible systemic vulnerabilities (Read: ETFs to Consider as Goldman Sachs Flags AI Risks).If the AI-driven stock market bubble bursts, heavily tech-reliant investor portfolios may suffer significant losses, which makes diversifying beyond tech funds and companies a smart play.If your portfolio is largely invested in ETFs tracking broad U.S. market indexes such as the S&P 500, you are, directly or indirectly, heavily exposed to the information technology sector, particularly in the “Magnificent 7” tech leaders. The S&P 500 allocates roughly 34% to information technology.To balance this tilt, adding international equity ETFs can broaden geographical exposure and strengthen overall diversification. Additionally, investing in international equity ETFs may boost risk-adjusted returns.ETFs to ConsiderDimensional International Core Equity Market ETF (DFAI)Dimensional International Core Equity Market ETF employs an active strategy seeking long-term capital appreciation. The fund has amassed an asset base of $11.23 billion and charges an annual fee of 0.18%.DFAI has a basket of 3,721 securities, with double-digit exposure to Japan (22.62%), the U.K. (12.6%) and Canada (11.75%). The fund has a one-month average trading volume of about 906,000 shares.Dimensional International Core Equity Market ETF has risen 4.54% over the past month and 16.46% over the past year.Avantis International Equity ETF (AVDE)Avantis International Equity ETF employs an active strategy and seeks long-term capital appreciation by investing primarily in a diverse group of non-U.S. companies across countries, market sectors and industry groups. The fund has amassed an asset base of $8.79 billion and charges an annual fee of 0.23%.AVDE has an asset basket of 3,172 securities, with double-digit exposure to Japan (21.34%), the U.K. (12.18%) and Canada (11.4%). The fund has a one-month average trading volume of about 510,000 shares.Avantis International Equity ETF has gained 5.04% over the past month and 19.64% over the past year.Schwab International Equity ETF (SCHF)Schwab International Equity ETF seeks to track the performance of the FTSE Developed ex-US Index with a basket of 1,453 securities. The fund has amassed an asset base of $50.12 billion and charges an annual fee of 0.03%.SCHF has double-digit exposure to Japan (21.13%) and the U.K. (12.55%). The fund has a one-month average trading volume of about 11.46 million shares.Schwab International Equity ETF has rallied 4.16% over the past month and 15.07% over the past year.SPDR Portfolio Developed World ex-US ETF (SPDW)SPDR Portfolio Developed World ex-US ETF seeks to track the performance of the S&P Developed Ex-U.S. BMI Index with a basket of 2,396 securities. The fund has amassed an asset base of $28.94 billion and charges an annual fee of 0.03%.SPDW has double-digit exposure to Japan (24.06%) and the U.K. (14.77%). The fund has a one-month average trading volume of about 3.39 million shares.SPDR Portfolio Developed World ex-US ETF has gained 4.27% over the past month and 15.96% over the past year.Schwab Fundamental International Equity ETF (FNDF)Schwab Fundamental International Equity ETF seeks to track the performance of the RAFI Fundamental High Liquidity Developed ex US Large Index with a basket of 948 securities. The fund has amassed an asset base of $17.21 billion and charges an annual fee of 0.25%.FNDF has double-digit exposure to Japan (22.38%), the U.K. (11.84%) and Canada (10.6%). The fund has a one-month average trading volume of about 1.56 million shares.Schwab Fundamental International Equity ETF has risen 4.81% over the past month and 18.03% over the past year.Emerging Market ETFsThose willing to take on slightly more risks can increase their exposure to emerging market ETFs, unlocking the potential for higher returns. Investors can look into funds like iShares Core MSCI Emerging Markets ETF IEMG and Vanguard FTSE Emerging Markets ETF VWO.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports Schwab International Equity ETF (SCHF): ETF Research Reports Schwab Fundamental International Equity ETF (FNDF): ETF Research Reports SPDR Portfolio Developed World ex-US ETF (SPDW): ETF Research Reports Avantis International Equity ETF (AVDE): ETF Research Reports Dimensional International Core Equity Market ETF (DFAI): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks