An Unforeseen Upturn: International Equities in a Trade War Knockdown
- In an unexpected twist, international equities managed to soar during the initial quarter, despite the breakout of trade skirmishes. This surge was primarily due to a mass exodus from U.S. technology and the allure of increased fiscal stimulus in foreign markets, which served as the backbone for soaring returns. As a testament to this trend, the core MSCI EAFE...
What Behaved Smarter Than a Boss During Tough Times? International Equities, That's Who!
- Value Investing Triumphs: In the realm of economic uncertainty, value factors often reign supreme as clever investors zero in on more wallet-friendly valuations during tumultuous times.
- Spreading the Wealth, Investment Style: International equities offer the tantalizing appeal of diversification, enabling shrewd investors to divide their risks while potentially capturing a wider range of economic prospects compared to the U.S.
- Calling the Shots with Policy Changes: Differences in monetary policy, particularly when central banks in multiple regions adopt different strategies (e.g., interest rates), can shape currency values and, by extension, equity markets.
MSCI EAFE: The Benchmark with a Brain
Quarterly Analysis for ClearBridge International Value ADR Funds as of Q1 2025
The MSCI EAFE Index (Morgan Stanley Capital International Europe, Australasia, and Far East) serves as a substantial benchmark for international developed markets—as the U.S. and Canada are kept out of the mix. This index is indispensable when it comes to analyzing the performance of international equities, as it offers a helpful measuring tool and functions as an insightful barometer for those seeking exposure to developed economies outside North America.
In periods of uncertainty or an escalation of trade tensions, the MSCI EAFE might exhibit volatility, yet its diversification benefits can also pique the interest of investors seeking refuge from U.S. markets. Additionally, its performance can be significantly swayed by currency fluctuations instigated by trade policies and monetary conditions.
Although specific data for the first quarter of 2021 is not readily available, these factors would likely have played a significant role in the rise of international equities during such turbulent times.
- The mass exodus from U.S. technology and the search for increased fiscal stimulus in foreign markets contributed to the surge in international equities during periods of trade war escalation, leading to soaring returns.
- As a consequence, the MSCI EAFE Index, which serves as a significant benchmark for international developed markets, experienced considerable volatility but also offered diversification benefits, making it appealing to investors seeking refuge in uncertain times.
- The performance of the MSCI EAFE can be profoundly influenced by currency fluctuations caused by trade policies and monetary conditions, which can significantly impact equity markets, as witnessed during the initial quarter of 2021.
- During the trade war knockdown, shrewd investors recognized the value in international equities, capitalizing on the diversification potential and the possibility of capturing a wider range of economic prospects compared to U.S. markets.
