ECB Stimulus Signals Risk-On for Global Stock ETFs
The European Central Bank’s decision to increase monetary stimulus could allow easy money to flow into global markets, bolstering exchange traded funds that track international equities.
In response to the promise of cheap money out of the ECB, Goldman Sachs Group raised its short-term outlook on global equities to overweight, Bloomberg reports.
“The net effect of the policy action from here will be positive for equity markets,” analysts lead by chief global equity strategist Peter Oppenheimer said in a research note.
Investors can capture global markets through all-world country ETFs like the Vanguard Total World Stock ETF (VT) and iShares MSCI ACWI ETF (ACWI) . [Have You Upped Your Global Stock ETF Game?]
Alternatively, U.S.-equity-heavy investors can target international ex-U.S. ETFs such as the Vanguard Total International Stock ETF (VXUS) , Vanguard FTSE All-World ex-US (VEU) , and iShares MSCI ACWI ex U.S. ETF (ACWX) .
Additionally, ETF investors can break down international exposure to developed and emerging markets. For instance, the iShares MSCI EAFE ETF (EFA) and Vanguard FTSE Developed Markets ETF (VEA) both track developed markets outside of North America.
The iShares MSCI Emerging Markets ETF (EEM) and Vanguard FTSE Emerging Markets ETF (VWO) provide access to the world’s developing economies. The emerging markets were among the best performing areas during the last infusion of easy money from the Fed as investors used funneled billions into riskier assets.
Morgan Stanley chief U.S. equity strategist Adam Parker also argued for continued strength in the U.S. markets, pointing to a 12-month S&P 500 forecast of 2,125.
For broad U.S. equity exposure, investors can consider something like the Vanguard Total Stock Market ETF (VTI) or focus on the S&P 500 with related ETFs like the the SPDR S&P 500 ETF (SPY) and iShares Core S&P 500 ETF (IVV) . [Stock ETF Rally Could Find Help From Underperforming Active Funds]
Morgan Stanley’s chief international economist, Joachim Fels, believes we are set for one of the longest global economic expansions on record due to loose money, Bloomberg reports. The economist contends that weak global growth and inflation will allow central bankers to extend stimulus measures.
“Compared to earlier expansions, growth is decidedly sub-par and expected to remain so despite the projected pick-up, but then again this could help to make it one of the longest economic expansions on record,” Fels said. “The glass is half full.”
For more information on global markets, visit our global ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
