The global markets have suffered a horrible year. This year was a difficult one for global markets due to high inflation, rising rates and supply-chain problems caused by the zero-Covid policy of China. The S&P 500 is off 17.5% this year (as of Dec 9, 2022).
Vanguard Total International Stock ETF VXUS has experienced a loss of approximately 16% this past year. Vanguard European Stock Index Fund VGK has lost about 16% iShares MSCI Emerging Markets Stock ETF EEM has fallen 20% The international market did not return in the same muted way.
Turkey and Latin America benefited while India and the United Kingdom were slightly affected. Notably, the Latin America region was favored by the commodity market rally.
What did you win?
Against this backdrop, below we highlight a few broad international ETFs that have topped the chart in the space as well as beat the S&P 500. The greenback strength, aided by the Fed’s super-hawkish Fed, helped currency-hedged ETFs to outperform the regular ones. International market traders were not surprised by the desire for dividends.
ETFs in focus
Franklin International Low Volatility High Dividend ETF LVHI – Up 0.6%; Yields 5.10% annually
The QS International Low Volatility, High Dividend Hedged Index underlying equity securities is made up of equity securities from developed markets outside of the United States. It has a relatively high yield, low price and earnings volatility and minimizes exposure to fluctuations in the value of the U.S. Dollar and other international currencies. The annual yield is 8.04% and fees are 40 bps.
Xtrackers MSCI High Dividend Yield Equity Fund HDEF – Down 1.8%; Yields 5.47% annually
The MSCI EAFE High Dividend Yield Index that tracks developed market performance is the underlying MSCI EAFE High Dividend Yield Index. The annual yield is 5.57% and fees are 20 bps.
WisdomTree International High Dividend Fund DTH – Down 2.2%; Yields 4.82% annually
The WisdomTree International High Dividend Index underlying is a fundamentally weighted Index which measures the performance and dividend yields of companies selected from WisdomTree International Equity Index. The fees for the fund are 58 bps, and the annual yield is 5.76%.
iShares Currency Hedged MSCI EAFE TF HEFA – Down 2.4%; Yields 2.06% annually
The MSCI EAFE 100 Percent Hedged To USD Index is an equity benchmark that measures its international stock performance. This index includes currency risk from the securities included in the Underlying Index and is hedging against the U.S. dollars on a monthly base. The fees are 35 bps and the annual yield is 26.16%.
Xtrackers MSCI EAFE Fixed Equity ETF DBEF – Down 2.8%; Yields 2.77% annually
The MSCI EAFE US Dollar Hedged Index is an underlying MSCI EAFE Index that provides exposure for equity securities in developed international stock market markets while mitigating the risk of fluctuations between the U.S. currency and other currencies. The annual yield is 15.70% and 35 bps respectively.
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