The S&P 500 index fell nearly 20% since the beginning of the year, but outside of the U.S., several equity markets are faring better. For example, the Global X MSCI Argentina ETF (ARGT) is roughly even, while the Global X MSCI Greece ETF (GREK) is up 1.5%. Therefore, investors may look abroad for opportunities in today’s (or any) market.
Let’s look at the newly launched actively managed Main International ETF (INTL) and why investors may want to consider it for their international allocation.
See our Active ETFs Channel to learn more about this investment vehicle and its suitability for your portfolio.
Main Management’s New Fund
The Main International
ETF (
INTL) seeks to outperform the
MSCI All Country World ex-
USA Index over a complete market cycle by investing in regions, countries, and sectors with favorable growth prospects or attractive valuations. In particular, the managers start with a top-down macroeconomic assessment before turning to fundamental analysis.
The fund holds between five and 20 third-party ETFs based on these analyses. In addition, the managers may shift up to 20% of the fund’s assets into cash and short-term fixed-income securities during challenging market conditions or employ covered call strategies to reduce overall portfolio volatility while generating income.
Investors may consider the fund for their portfolio as an alpha-seeking global ex-U.S. strategy that supplements core U.S. equity allocations. Since the fund invests in other ETFs, it offers a high level of diversification. Meanwhile, focusing on low volatility could provide smoother returns than other international funds.
What’s in the Portfolio?
INTL holds a portfolio consisting of country ETFs that change over time based on macro- and microeconomic conditions. With a 0.99% expense ratio, the fund is more costly than its passively-managed peers but offers targeted international exposure rather than a generic market cap-weighted approach.
Currently, the portfolio includes 12 holdings:
|
Name
|
Ticker
|
Allocation
|
|
Franklin FTSE Japan ETF
|
FLJP
|
14.71%
|
|
Franklin FTSE United Kingdom ETF
|
FLGB
|
14.25%
|
|
KraneShares CSI China Internet ETF
|
KWEB
|
14.20%
|
|
iShares MSCI Germany ETF
|
EWG
|
10.57%
|
|
Franklin FTSE Canada ETF
|
FLCA
|
9.91%
|
|
Franklin FTSE Brazil ETF
|
FLBR
|
6.79%
|
|
iShares MSCI France ETF
|
EWQ
|
5.89%
|
|
iShares MSCI Sweden ETF
|
EWD
|
5.62%
|
|
iShares MSCI Poland ETF
|
EPOL
|
5.11%
|
Under the hood, the equities underlying these funds have an aggregate price-earnings ratio of 11.37x and price-sales ratio of 0.94×. These readings are lower than the MSCI All-World average and significantly less than U.S. equity multiples. Meanwhile, the holdings’ sales and cash flow growth rates are above the category averages.
The Bottom Line
Investors seeking targeted international exposure—rather than market cap-driven exposure—may want to consider Main Management’s newly launched The Main International
ETF (
INTL). With its focus on attractive valuations and favorable growth prospects, the fund could help investors offset poor returns in the domestic equity markets.
Take a look at our recently launched Model Portfolios to see how you can rebalance your portfolio.
