Economic Outlook - Global economic growth is projected to be at its lowest levels since the pandemic, but the outlook has improved slightly due to increased AI-related investments offsetting U.S. import tariffs [1] - Fitch Ratings forecasts global economic growth of 2.5% in 2025 and 2.4% in 2026, a 0.1 percentage point upward revision from September [2] - OECD anticipates global GDP to decline from 3.2% in 2025 to 2.9% in 2026, before recovering to 3.1% in 2027 [2] Global Equity Performance - The S&P World Index has increased by 19.61% over the past year and 2.59% quarter to date, outperforming the S&P 500 [3] - Investors with portfolios concentrated in U.S. ETFs may have higher exposure to the information technology sector, particularly the "Magnificent 7" tech giants, which constitute about 35% of the S&P 500 [4] Investment Strategies - International equity ETFs provide a practical solution for investors looking to reduce U.S. asset exposure, offering diversification and potential for improved risk-adjusted returns [5] - In November, international equity ETFs experienced inflows of $24.6 billion [6] Market Conditions - Anticipation of a Fed rate cut in December is enhancing the attractiveness of global equities, with an 87.2% probability of a rate cut indicated by the CME FedWatch tool [7] - A declining U.S. dollar is also increasing interest in global equity funds, with the U.S. Dollar Index falling 0.54% over the past five days and 8.75% year to date [8] ETF Recommendations - Recommended international equity ETFs include Schwab International Equity ETF (SCHF), Schwab Fundamental International Equity ETF (FNDF), Dimensional International Core Equity Market ETF (DFAI), and Avantis International Equity ETF (AVDE), all with significant exposure to Japan, the U.K., and Canada [9][10] - For dividend-focused investments, options include WisdomTree International Hedged Quality Dividend Growth Fund (IHDG), Vanguard International Dividend Appreciation ETF (VIGI), and iShares International Select Dividend ETF (IDV), with yields of 2.55%, 1.86%, and 4.44% respectively [11][12] - Emerging market ETFs like iShares Core MSCI Emerging Markets ETF (IEMG), Vanguard FTSE Emerging Markets ETF (VWO), and iShares MSCI Emerging Markets ETF (EEM) have shown a gain of 17.92% over the past year [13]

Economic Landscape - The current economic environment presents heightened uncertainty for investors, driven by concerns over AI bubbles, overvalued U.S. asset prices, and ongoing economic and geopolitical tensions [1] Investment Strategies - Broadening exposure to global equities is recommended as a strategy, with the S&P World Index gaining 16.39% over the past year and 0.91% quarter to date, outperforming the S&P 500 [2] Investor Sentiment - U.S. equity funds experienced a slowdown in demand, with only $1.15 billion added in the week ending Nov. 12, marking the weakest weekly net inflow since mid-October [3][4] - Inflows into U.S. large-cap funds dropped sharply to $2.35 billion from $11.91 billion the previous week, indicating a shift in investor sentiment [4] AI Bubble Concerns - There are growing concerns on Wall Street regarding a potential bubble in the AI sector, with fears that excessive capital inflow may obscure future revenue and profit visibility [5] Sector Exposure - Portfolios heavily invested in U.S. market indexes like the S&P 500 are significantly exposed to the information technology sector, particularly the "Magnificent 7" tech leaders [6] - Approximately 36% of the S&P 500 is allocated to information technology, highlighting the importance of managing concentration risk and ensuring diversification [7] International Equity ETFs - Adding international equity ETFs can enhance geographical exposure and improve overall diversification, with specific ETFs like Schwab Fundamental International Equity ETF (FNDF) and Dimensional International Core Equity Market ETF (DFAI) showing significant exposure to Japan, the U.K., and Canada [8][9] Dividend-Focused Funds - Global dividend-focused funds are recommended for reliable income during market volatility, with options like WisdomTree International Hedged Quality Dividend Growth Fund (IHDG) and Vanguard International Dividend Appreciation ETF (VIGI) offering attractive dividend yields [11][12] Emerging Market ETFs - Emerging market ETFs present opportunities for higher returns, with inflows of $2.17 billion in the week ending Nov. 12, marking a third consecutive week of additions [13] - The Dow Jones Emerging Markets Index has gained 21.05% over the past year and 1.05% quarter to date, indicating strong performance [13]

Core Insights - International equities have significantly contributed to portfolio performance in 2025, benefiting from both long and short-term factors, leading to a shift from underweight to neutral positions among investors [1][2] - The Avantis International Equity ETF (AVDE) has shown strong momentum, surpassing $10 billion in assets under management (AUM) due to substantial net inflows [2][3] Performance Metrics - AVDE has achieved a year-to-date return of 31%, outperforming its category average over one, three, and five-year periods [3] - The ETF has attracted over $560 million in net inflows from September 18th to October 18th, contributing to over $3 billion in net inflows year-to-date [2][3] Investment Strategy - AVDE employs an active investment approach, focusing on ex-U.S. firms, particularly smaller, high profitability, or value opportunities [3] - The fund's managers utilize fundamental criteria such as shares outstanding, cash flow, revenue, expenses, and price to book to select investments [3] Market Outlook - The outlook for AVDE remains positive, with expectations of continued momentum as the U.S. dollar may remain weak and tariff uncertainties persist [4]