Systematic Allocation in International Equity Regimes This research examines the critical quantitative investment problem of systematic tactical allocation to international equity mandates—specifically Emerging Markets (EM) and Europe, Australasia, and the Far East (EAFE)—amidst conjectured macroeconomic regime transitions. The investigation is precipitated by observable deteriorations in USD hegemony, elevated geopolitical risk premiums, and protracted macroeconomic uncertainty. These factors collectively ...

Core Viewpoint - International stocks have shown outperformance relative to U.S. stocks in 2025, marking a rare shift in the trend where U.S. stocks have consistently outperformed since the financial crisis [1][3]. Market Performance - In 2025, the iShares MSCI EAFE ETF outperformed the State Street SPDR S&P 500 ETF with returns of 31.6% compared to 17.7%, while the iShares MSCI Emerging Markets ETF achieved a return of 34% [5]. Drivers of Change - The shift from growth to value investing has been a significant factor, alongside a slowdown in the U.S. labor market and declining retail sales, leading investors to seek more reasonably valued stocks [6]. - The weakening dollar has also contributed to the boost in international stocks [6]. Investor Behavior - ETF investors have increasingly favored international and emerging markets equity ETFs, which have attracted new investments at nearly double the rate of U.S. equity ETFs over the past year [7]. Valuation and Economic Factors - The S&P 500 has a forward price-to-earnings (P/E) ratio of around 29, while international developed and emerging markets stocks trade at 19 and 18 times earnings, respectively, indicating a valuation gap that presents an attractive opportunity [8]. - Economic factors such as fiscal stimulus in Germany, productivity gains, and a lower dollar could enhance growth rates for international equities [9]. - Earnings growth in 2026 is projected to be in the high single-digit to low double-digit range across developed and emerging markets, supporting the case for higher stock prices [9].

Core Insights - The article emphasizes the importance of international equity exposure for investors, highlighting that significant market value exists outside the U.S. [2] - The Schwab International Equity ETF (SCHF) offers a low-cost solution to address home bias in investing, providing access to developed market equities [2][3] Group 1: Fund Overview - SCHF manages approximately $55.4 billion in assets and provides access to around 1,300 established companies across Europe, Japan, Canada, and Australia [3] - The fund's expense ratio is notably low at 0.03% annually, allowing investors to retain more of their returns while benefiting from a 2.35% dividend yield [3] Group 2: Performance Comparison - Over the past decade, SCHF returned 167%, while the SPY delivered 264%, resulting in a 97 percentage point performance gap primarily due to U.S. tech dominance and dollar strength [4][8] - Recent performance indicates a positive trend, with SCHF gaining 35% over the past year, significantly higher than its five-year annualized return of 11% [6] Group 3: Competitive Advantage - SCHF's cost structure is a key differentiator, with its 0.03% expense ratio significantly lower than competitors like EFA at 0.32% and comparable to VEA at 0.05% [7] - The fee difference compounds over time, favoring cost-conscious investors and enhancing long-term returns [7]

Core Insights - The FT Vest International Equity Moderate Buffer ETF – September aims to provide exposure to developed ex-US large- and mid-cap equities through a structured one-year buffer-and-cap strategy using FLEX options on the iShares MSCI EAFE ETF [1] Investment Strategy - The fund primarily invests in a series of exchange-listed, OCC-cleared European-style call and put FLEX options with a common September expiration, rather than directly holding the underlying equity ETF [1] - Strike selection is performed at the beginning of each outcome period to establish a preset downside buffer through purchased puts, while purchased and written calls determine the upside participation and cap for the period [1] - Residual cash and collateral are allocated to short-term USD money market instruments to ensure margin and operational liquidity, rather than to generate returns [1] - At each September outcome reset, FLEX positions are transitioned into a new one-year options package to renew the buffer, cap, and participation profile [1]

Core Viewpoint - The iShares MSCI EAFE ETF has demonstrated strong recent performance, indicating a potential shift for investors after a decade of US equity dominance [1] Group 1 - International developed markets have lagged behind US markets for the past ten years [1] - The recent performance of the iShares MSCI EAFE ETF may signal a turning point for investment strategies [1]

Core Insights - The Avantis International Equity ETF (AVDE) achieved a remarkable 39% return in 2025, significantly outperforming both the S&P 500, which gained 18%, and Bitcoin, which saw a nearly 10% decline [2][3][8] Performance Comparison - AVDE's performance highlighted a fundamental shift in international markets, with the iShares MSCI EAFE ETF gaining 32%, indicating that AVDE's active management strategy added approximately 7 percentage points of alpha over passive international exposure [3] Drivers of Performance - European economic stabilization and higher interest rates created favorable conditions for financial stocks, with AVDE's portfolio heavily invested in European banks such as HSBC, UBS, Barclays, and Deutsche Bank, contributing to the fund's success as the STOXX Europe 600 Banks Index surged 65% [4] - Increased defense spending due to geopolitical tensions benefited European defense contractors like Rheinmetall, Safran, and Rolls-Royce, with the European defense sector climbing nearly 60% in 2025, further enhancing AVDE's performance [5] - Currency movements played a significant role, as the weakening of the dollar against the euro and pound resulted in translation gains for U.S. investors holding international stocks, amplifying returns [6] Fund Characteristics - AVDE employs an active management strategy with factor tilts towards value, profitability, and smaller companies, leading to an overweight in financials and industrials while underweighting mega-cap tech [7] - The fund maintains extreme diversification with over 1,000 positions, ensuring no single stock exceeds 1% of the portfolio, which mitigates concentration risk [7] - AVDE charges a low expense ratio of 0.23%, making it an attractive option for investors [8]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - The iShares MSCI EAFE ETF (NYSEARCA: EFA) provides investors with exposure to global equities in markets such as Europe, Asia, and Australia, making it a suitable option for portfolio diversification [1] Group 1 - The ETF is designed for investors looking to increase access to international markets [1]

Core Insights - BlackRock's iShares Bitcoin Trust has become the most profitable ETF for the $12 trillion asset manager, generating significant annualized fee revenue and surpassing older ETFs in revenue generation [2][4] - S&P Global has launched a new hybrid index, the "Digital Markets 50," which combines cryptocurrencies and crypto-related equities, tracking 35 publicly traded companies and 15 cryptocurrencies [6][8] Group 1: BlackRock's iShares Bitcoin Trust - The iShares Bitcoin Trust has $97 billion in assets under management, making it more profitable than older ETFs that have been trading for decades [2] - Recent inflows for the iShares Bitcoin Trust reached $2.5 billion, indicating strong institutional interest despite market volatility [3] - The share price of the iShares Bitcoin Trust fell by 4% to $65.85, reflecting broader market trends [4] Group 2: S&P Global's New Index - The "Digital Markets 50" index aims to provide a comprehensive benchmark for both cryptocurrencies and related equities, allowing asset managers to gain diversified exposure [6][7] - The index includes major cryptocurrencies such as Bitcoin, Ethereum, and XRP, along with publicly traded companies involved in blockchain [7] - S&P Global emphasizes that the new index reflects the growing establishment of cryptocurrencies in global markets, providing consistent tools for market participants [8]

Core Insights - BlackRock's iShares Bitcoin Trust ETF (IBIT) has become the most profitable ETF for the company, achieving this status just 21 months post-launch, surpassing funds that have been in operation for over 20 years [1][2] - IBIT is nearing $100 billion in assets under management, currently holding approximately $98.47 billion across 1.38 billion shares, and generates around $244.5 million in annual revenue for BlackRock [1][3] - The rapid growth of IBIT, which is on track to reach $100 billion in just 435 days, significantly outpaces Vanguard's S&P 500 ETF, which took 2,011 days to reach the same milestone [3] Market Demand and Performance - The success of IBIT reflects strong demand from both institutional and retail investors, indicating a robust risk appetite for Bitcoin [3] - Last week, IBIT recorded $1.8 billion of the total $3.2 billion inflows into U.S. spot Bitcoin ETFs, marking its second-largest week on record [5] - Overall, investment products linked to cryptocurrencies saw substantial inflows of $5.95 billion globally last week, highlighting a growing interest in the crypto market [5] Comparative Analysis - Experts argue that comparing Bitcoin ETFs to traditional ETFs is unfair due to Bitcoin's unique structural advantages, such as scarcity and potential for high returns [4] - Predictions suggest that if Bitcoin's price were to exceed $1 million, Bitcoin ETFs would clearly outperform traditional funds, solidifying their leadership in the market [4] Investor Base and Market Dynamics - The introduction of Bitcoin ETFs has broadened the investor base, attracting long-term holders despite potential market downturns that could affect Bitcoin's correlation with risk markets [6]