This article was originally published on ETFTrends.com.
Developed and emerging markets stocks and exchange traded funds are struggling this year, but investors are showing increasing affinity for ex-US funds. One of the ex-US funds recently luring investors is the iShares MSCI ACWI ex U.S. ETF (ACWX) .
The laundry list of global concerns has diminished optimism and driven a share of fund managers whom expect the global economy to decelerate over the next year to the highest level since November 2008, according to Bank of America Merrill Lynch.
The selling and pessimism have also pushed the forward price-to-earnings ratio of the MSCI All Country World Index, which follows 23 developed and 24 emerging markets, to around 18, its lowest level since early 2016. The $3.74 billion ACWX tracks the MSCI ACWI ex USA Index.
ACWX “took in a record $358 million last week. It hasn’t seen a single day of outflows in more than two months. Almost 17 percent of the fund’s holdings are Japanese equities, and banks are its largest industry group, comprising around 14 percent of the portfolio,” according to Bloomberg.
ACWX holds nearly 1,300 stocks and has a three-year standard deviation of 11.33%, according to issuer data. The fund is down nearly 14% year-to-date. The ETF offers exposure to developed and emerging markets. Japan, the U.K. and China combine for over 36% of ACWX's geographic exposure. Financial services, industrial and consumer discretionary stocks combine for about 45% of ACWX's sector weight.
Some market observers believe expected returns on U.S. stocks are lower from a historical perspective due to high valuations. Alternatively, BlackRock sees more opportunities in non-U.S. equities, but investors will be exposed to greater risks if they seek out these areas of potentially higher returns.
“Although the U.S. stock market remains healthy, with a price-to-earnings ratio of around 17, prices are 15 percent higher than the global average, according to a year-end research report by UBS Global Wealth Management. Euro-zone and emerging-market stocks have lower valuations, but both regions are exposed to China’s slowdown,” reports Bloomberg.
ACWX charges 0.31% per year, or $31 on a $10,000 investment.
For more information on global markets, visit our global ETFs category.
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