Second Rate Cut Emphasizes International Equities Diversification

Core Viewpoint - The U.S. Federal Reserve's second rate cut of the year is expected to further weaken the U.S. dollar, which will benefit international equities in 2025 [1][2]. Group 1: Impact of Dollar Weakness - The declining dollar is favorable for non-U.S. equity returns, as highlighted by Thornburg Investment Management [2][3]. - A weaker dollar enhances the performance of international equities, as their returns are often tied to the strength of local currencies [3][4]. Group 2: Investment Strategies - Investors interested in international equities post-rate cut should consider active investment strategies, particularly through Thornburg's funds: Thornburg International Equity ETF (TXUE) and Thornburg International Growth Fund ETF (TXUG) [5][6]. - TXUE offers broad exposure to international equities, while TXUG focuses on growth, making it suitable for investors wary of high valuations in large-cap U.S. growth stocks [6]. Group 3: Risk Management - Thornburg's investment approach includes a risk mitigation process that considers currency hedging, especially during periods of uncertainty [4][7]. - The firm emphasizes buying at a price with a margin of safety, aiming to shield investments from political volatility [7].