ETF TV #130 Steven Schoenfeld, Chief Executive at MarketVector Indexes discusses economic exposure indexes, investable strategies for a global world in flux.
Precisely defined global and domestic economic exposure indexes allow investors to supplement or diversify their country/regional exposure, or take tactical investment actions to add alpha.
- Globalization is in flux, oscillating between globalization and deglobalization forces, with deglobalization currently the prevailing trend.
- Increased cycles of global versus domestic dominance will drive divergence within country and regional performance.
- The world is shifting in a major way – macro-economic trends, new and disruptive industries/themes, and changes in trade flows warrant a reconsideration of how investors define countries.
- Using country or regional indexes structured around economic exposure can provide investors with a more precise, targeted investment solution for a world in flux.
The seemingly inexorable globalization trend has been halted by the COVID-19 pandemic, heightened geopolitical tension, the war in Ukraine, and inflation on a global scale. Although it is unimaginable to expect a fully deglobalized world, structural trends toward localization now exist. The impact of global and local macro drivers will impact business depending on their dominant business exposure. Investors who want to capture these differences that may result in divergent trends will need a targeted approach that segments companies within a country or region by their revenue exposure to global or local drivers. Precisely defined global and domestic economic exposure indexes allow investors to supplement or diversify their country/regional exposure, or take tactical investment actions to add alpha.
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