These global value ETFs have outperformed U.S. value funds.
The international markets have been outperforming their U.S. counterparts this year by a significant margin. While U.S. stocks will certainly bounce back, this is the perfect opportunity for investors to diversify their portfolios with international and global ETFs.
Value stocks have generally performed well, mostly in overseas markets, over the past year. The MSCI World Value Index returned about 12% in 2024 and is up roughly 7% already this year through March 31.
With uncertainty and volatility in the U.S. markets expected to continue in the near-term, due to tariffs, a slowing economy, and potentially rising inflation, investors may want to look overseas for some good value.
Global ETFs offer exposure to stocks all around the world, typically from developed countries. There are global ETFs, which include global U.S. stocks of companies with large international footprints, and global ETFs ex-U.S., which exclude U.S. companies entirely.
Here are three top global value ETFs that exclude U.S. stocks.
1. Dimensional International Value ETF
The Dimensional International Value ETF (NYSE:DFIV) has been the top-performing global value ETF this year, with a return of 12.2% year-to-date.
One of the things that sets this ETF apart, aside from its returns, is it is actively managed, meaning the portfolio management team handpicks the stocks that make up the ETF. In choppy markets like this, actively managed funds are typically a benefit, because managers can react and make changes that may help the portfolio.
This particular fund currently holds about 473 stocks of all cap sizes from around the world. About 22% is invested in Japan, while 13% is invested in the U.K., 11% is invested in Canada, and 10% of the stocks are from France. It is overwhelmingly invested in the financial sector, which accounts for about 35%, followed by energy at 13% and materials at 12%.
The top three holdings as of the end of March were Shell, TotalEnergies, and Zurich Insurance Group.
The ETF is up 12.2% YTD and has a one-year return of 12.3%. Further, it has a three-year annualized return of 9.2% and a five-year annualized return of 12%. The three- and five-year returns have beaten its benchmark, the MSCI World ex USA Value Index. It also has a reasonable expense ratio of 0,25% for an active fund.
The VictoryShares International Value Momentum ETF (NASDAQ:UIVM) is a global value fund that tracks the performance of an index it developed with Nasdaq called the Nasdaq Victory International Value Momentum Index. The index includes non-U.S. stocks that have higher exposure to value and momentum factors while limiting turnover and seeking to reduce volatility
Each stock in the index is ranked for its value and momentum scores, with the top 25% selected for the portfolio. Then, the stocks with lower realized volatility are given higher weights in the portfolio.
It currently holds about 198 stocks with about 14% each from Japan and Canada, with the U.K. accounting for 10.5% and Germany making up 10%. About 25% are in financials, followed by 18% in industrials and 10% in consumer discretionary stocks.
The top three holdings are Swiss Prime Site, Enbridge (NYSE:ENB), and Waste Connections (NYSE:WCN).
The ETF is up about 11.4% YTD and is up roughly the same over the past year. It has a three-year annualized return of about 6% and a five-year annualized return of 8%. Its expense ratio is 0.35%.
3. Dimensional International Small Cap Value ETF
Dimensional Fund Advisors (DFA) makes a second appearance on the list with the Dimensional International Small Cap Value ETF (NYSE:DISV). While the other two on the list are all-cap funds, this particular ETF invests in small-cap stocks from developed markets.
It is also actively managed, like the other Dimensional ETF, with the MSCI World Ex-U.S. Small Cap Value Index as its benchmark.
The portfolio managers seek out stocks with lower relative values that have long-term drivers of expected returns. They also seek to balance risk through broad diversification across companies, sectors, and countries.
It holds about 1,400 stocks, with 25% coming from Japan, 13% from the U.K., and 10% from Canada. Financials make up about 25% of the portfolio, while industrials and materials account for roughly 20% each.
Its top three holdings are BCA MPS, Swiss Prime Site, and Banca Popolare Di Sondrio.
The ETF is up about 11.2% and has a one-year return of about 11.6%. It has only been around since 2022, but it has a three-year annualized return of about 8.2%. It has an expense ratio of 0.42%.
All three would make excellent options to diversify a portfolio.