JACK McMANMON: For the Q3 Investment Outlook for advisors, I’m Jack McManmon with two minutes on international equity opportunities for your clients.
The first half of this year provided a case study on why international stocks are worth considering for your clients, and we see this trend continuing into the second half of this year. Last quarter, we talked about attractive valuations, convenient implementation, and diversification where international stocks are concerned, and these remain key points to potentially share.
Here in Q3, we believe there’s still time for your clients to rebalance and potentially benefit if they remain underweight international equities. Europe may be turning into a growth story by stepping up fiscal support and taking previously avoided steps, while economic growth is being supported by increased optimism.
The OECD’s leading economic indicator for its four largest economies, Germany, France, the UK, and Italy, rose for 32 consecutive months through June. After a decade of dollar strength overweights in US equities, and unpredictable US policies, investors seem to be gradually adding to their international allocations, contributing to international currency strength. Stronger international currencies translate into more US dollars, boosting returns for US investors. In fact, dollar weakness has contributed about half of international equities’ outperformance this year, so it’s important to understand that any rebound in the US dollar could reduce this performance.
Remember the key elements that Schwab Asset Management seeks when constructing portfolios. Cost efficiency, diversification, and transparency have improved for all international equities over recent years leading to a wide range of investment opportunities. And while you and your clients are considering these opportunities, a quick reminder that Schwab Asset Management offers a wide range of international ETFs and mutual funds.
If you have any questions about international allocations and how to position them with your clients’ portfolios, please reach out to us for a complimentary portfolio evaluation. Thank you for watching.
Investors in mutual funds and ETFs should consider carefully information contained in the prospectus or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can obtain a prospectus by visiting schwabassetmanagement.com/prospectus. Please read it carefully before investing.
Past performance is no guarantee of future results, and the opinions presented cannot be viewed as an indicator of future performance.
Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
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