Exploring the Attractive Opportunities in the iShares MSCI ACWI ex US ETF (SCHF)
Investing in international markets can be a rewarding experience, offering diversification and potential for higher returns. One ETF that has been gaining attention lately is the iShares MSCI ACWI ex US ETF (SCHF). This exchange-traded fund (ETF) has a buy rating due to its modest valuation, strong relative strength, and impressive performance in developed international markets, including Europe.
Modest Valuation
The SCHF ETF has a price-to-earnings (P/E) ratio of 13.83, which is lower than the MSCI ACWI index’s P/E ratio of 16.46. This means that SCHF may be undervalued compared to the overall international market. A lower valuation can make an ETF a more attractive investment as it may offer higher potential returns in the future.
Strong Relative Strength
SCHF has also shown relative strength compared to the overall market. Over the past year, the ETF has outperformed the MSCI ACWI index, with a total return of 14.23% compared to the index’s total return of 12.27%. This outperformance could indicate that SCHF is a stronger investment choice than the broader international market.
Impressive Performance in Developed International Markets
SCHF offers low-cost, tax-efficient exposure to large- and mid-cap equities outside the U.S. The ETF has a high dividend yield of 3.0%, which can provide a steady income stream for investors. Furthermore, SCHF has performed well in developed international markets, particularly Europe. For instance, the ETF’s European holdings account for over 60% of its total assets.
Technical Indicators Suggest a Potential Breakout
From a technical perspective, SCHF’s charts indicate a potential breakout. The ETF has formed a bullish cup and handle pattern, which is a common chart pattern indicating a potential price increase. Key resistance levels for SCHF are at $20-$21. A break above these levels could signal a continuation of the uptrend, with a potential target price of $28.
Impact on Individual Investors
For individual investors, the potential opportunities in SCHF can provide a well-diversified and potentially high-yielding investment. By investing in this ETF, investors can gain exposure to large- and mid-cap equities in developed international markets, particularly Europe, while also benefiting from a relatively low valuation and a steady income stream.
Impact on the World
On a broader scale, the performance of SCHF and other international ETFs can have an impact on the global economy. Strong performance in international markets can lead to increased economic activity and potentially higher trade volumes. Furthermore, the steady income stream provided by SCHF’s high dividend yield can help support economies with a large pension system or a significant population reliant on fixed income investments.
Conclusion
The iShares MSCI ACWI ex US ETF (SCHF) offers an attractive investment opportunity for those seeking diversification and potentially higher returns. With a modest valuation, strong relative strength, and impressive performance in developed international markets, SCHF may be a solid choice for investors looking to expand their global equity exposure. Furthermore, the potential breakout indicated by SCHF’s technical indicators could lead to even higher returns in the future.
- SCHF has a lower valuation than the overall international market, potentially making it undervalued.
- The ETF has outperformed the broader international market over the past year.
- SCHF offers low-cost, tax-efficient exposure to large- and mid-cap equities outside the U.S.
- The ETF has a high dividend yield of 3.0%.
- SCHF has performed well in developed international markets, particularly Europe.
- Technical indicators suggest a potential breakout, with key resistance at $20-$21 and a bullish cup and handle pattern targeting $28.
- For individual investors, SCHF can provide diversification and a potential high-yielding investment.
- Strong performance in international markets can have a positive impact on the global economy.
