Monetary policy and strong earnings support international ETFs


International markets and related exchange-traded funds maintained their momentum on Friday, with European equities closing at an all-time high, as a strong earnings season and favorable monetary policy outlook from the European Central Bank helped offset the concerns about the more contagious variant of Covid-19 Delta.

“Monday’s liquidation appears to be a brief moment of panic, and… was enough, it seems, to reset sentiment and activity and cause a resurgence of bullish momentum. Central banks have done their part to appease fears, especially the ECB this week, ”Chris Beauchamp, chief market analyst at online trader IG, told Reuters.

The European Central Bank (ECB) on Thursday kept monetary policy stable and pledged to acquire € 1.85 trillion, or $ 2.2 trillion, in bonds through March 2022 as part of its emergency pandemic purchasing program, CNBC reported.

The ECB said in a statement that interest rates would remain “at their current or lower levels until it sees inflation hit 2% well before the end of its projection horizon and lastingly for the remainder of. the projection horizon, and it considers that the progress made in core inflation is sufficiently advanced to be compatible with a stabilization of inflation at 2% in the medium term.

“It may also involve a transitional period during which inflation is slightly above target,” he added.

The ECB is also considering the resurgence of coronavirus cases, which could weigh on the recovery process.

“The reopening of large parts of the economy is supporting a strong rebound in the service sector. But the Delta variant of the coronavirus could slow down this resumption of services, especially in tourism and hotels, ”said ECB President Christine Lagarde, according to Reuters.

Investors interested in international markets may want to consider ETF strategies for overseas exposure. For example, the Avantis International Equity ETF (AVDE) is built on an academic and market-tested framework to identify securities with expected high returns based on market prices and other company information. Drawing on negotiation and portfolio management processes, the Avantis team analyzes whether the perceived benefits of a transaction outweigh the associated costs and risks. AVDE invests primarily in a diverse group of companies of all market capitalizations in developed countries, sectors and industries other than the United States, with an emphasis on investments in companies that are expected to have higher expected returns.

In addition, the American Century International Diversified Quality ETF (NYSEArca: QINT) uses the American Century Investments Intelligent Beta methodology, which systematizes many of the same attributes that fundamental research and stock selection seek to identify in a rules-based index approach. QINT is a large foreign mixed fund that seeks to improve core international exposure. Its rules-based approach analyzes the quality, growth and value characteristics of each stock to select individual stocks. It also dynamically adjusts exposures to take advantage of prevailing market conditions.

For more news, information and strategies, visit the Core Strategies channel.

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