The U.S. economy showed no signs of slowing down in the second quarter thanks to solid gains in consumer spending and business investment. And despite this growth, inflation pressures subsided, which could enable the Federal Reserve to cut rates in September.
Still, equity valuations are lofty by historical standards, and any unexpectedly bad news could quickly force investors to reassess their portfolios. As a result, it may be a good time to consider international diversification.
In this article, we’ll look at three newly launched active international ETFs and why you might want to consider them.
1. A Fund of Funds (FOF) Driven by Technical Analysis
The Ocean Park International ETF (DUKX) is an actively managed fund of funds that tactically allocates across international equity ETFs. The manager’s proprietary trend following strategy uses banded moving averages to generate buy and sell signals to provide total return and limit exposure to downside risk.
Notably, the fund holds both developed and emerging market funds, providing exposure to a more diverse set of opportunities than some other international funds.
Currently, the fund’s five largest holdings include:
- Vanguard FTSE All-World ex-US Index Fund (VEU)
- Vanguard Emerging Markets Stock Index Fund (VWO)
- Vanguard International Dividend Appreciation Index Fund (VIG)
- iShares MSCI EAFE Small-Cap ETF (SCZ)
- iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)
While the fund has a lofty 1.18% expense ratio, the advisor has contractually waived some of its management fees until January 31, 2026, resulting in a 0.99% net expense ratio.
2. An International Buffer ETF To Limit Downside Risk
The Innovator International Developed 10 Buffer ETF (IBUF) is an actively managed “defined outcome” fund that tracks the returns of the iShares MSCI EAFE ETF (EFA) to a cap and provides a 10% downside buffer each quarter. For instance, the starting cap was 3.38% and the starting buffer was 10% for the July 1 to September 30 quarter.
Retirees looking to limit downside risk may want to consider this ETF to maintain some equity market exposure without the risk of catastrophic loss. That said, you should carefully consider the trade-off between the cap and the buffer before investing.
3. A New ETF From a Well-Known Mutual Fund Manager
The Capital Group International Core Equity ETF (CGIC) is among the latest offerings from the mutual fund manager as Capital Group continues its diversification into active ETFs. Unlike other newly launched ETFs on our list, this fund harnesses the American Funds’ track record of delivering solid risk-adjusted returns across their well-known mutual fund lineup.
CGIC invests in well-established dividend-paying companies outside of the U.S., including emerging markets, with the goal of reducing volatility. Meanwhile, its 0.54% expense ratio makes it cheaper than comparable mutual funds and many active ETF peers.
Currently, the largest holdings include financials (18.4%), information technology (15.8%), industrials (14.6%) and consumer discretionary (10.6%). And some of the largest individual holdings include household names like TSMC, Novo Nordisk, ASML, AstraZeneca, TotalEnergies and MediaTek.
Popular Active International ETFs
We’ve covered some of the latest active ETFs offering international exposure, but they are just a handful of the many options out there.
These ETFs are sorted by their YTD total return, which ranges from 6.7% to 9.9%. They have AUM between $5.4B and $7.1B and expenses running between 0.18% and 0.36%. They are currently yielding between 2.5% and 7.7%.
| Name | Ticker | Type | Active? | AUM | YTD Total Ret (%) | Yield | Expense |
|---|---|---|---|---|---|---|---|
| Dimensional International Value ETF | DFIV | ETF | Yes | $7.15B | 9.9% | 7.7% | 0.27% |
| Avantis International Small Cap Value ETF | AVDV | ETF | Yes | $5.63B | 8.8% | 3.6% | 0.36% |
| JPMorgan International Research Enhanced Equity ETF | JIRE | ETF | Yes | $6.02B | 8.6% | 2.5% | 0.29% |
| Dimensional International Core Equity Market ETF | DFAI | ETF | Yes | $5.65B | 7.1% | 5.1% | 0.18% |
| Dimensional International Core Equity 2 ETF | DFIC | ETF | Yes | $5.47B | 6.7% | 5.4% | 0.24% |
The Bottom Line
International diversification is an excellent way to reduce risk and improve long-term risk-adjusted returns. While there are many passive international ETFs, active ETFs offer unique strategies to reduce risk or potentially increase alpha, and they may be right for some portfolios.
