"Recently we expanded our suite of MSCI Index based ETFs to include the First Asset MSCI International Low Risk Weighted ETF (TSX: RWX). MSCI is a market leader in global equity indexes and has approximately $1.9 trillion in assets benchmarked to the MSCI EAFE index suite1. RWX allows investors and advisors to take advantage of the growing opportunities available in international equities by leveraging a comprehensive and consistent approach across all market caps sizes, sector and style segments".
- Rohit Mehta, President, First Asset Investment Management Inc. | August 2017
International markets are drawing the attention of analysts and assets from investors. Several themes to consider are:
- Positive momentum - the MSCI EAFE Index is up 17% over the past year compared to 2% in 20162.
- Increasingly positive sentiment from the analyst community based on growth and valuations.
- Significant asset inflows into International equities from Canadian and US investors3.
- Valuation metrics - Price-Earnings, Price-To-Book, Price-To-Sales and Price-To-Cash Flow ratios are at levels that suggest international equities could be an attractive opportunity.
- Political uncertainty in the U.S. could put pressure on the U.S. equity market.
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||Price-To-Cash Flow Ratio
|MSCI EAFE Index
|Source: Morningstar Markets Observer, as of June 30, 2017.
First Asset MSCI International Low Risk Weighted ETF has been designed to track the MSCI EAFE Risk Weighted Top 175 Index (the "Index").
The Index selects 175 of the least volatile constituents of the MSCI EAFE Index, reweighting the stocks so that the ones with lower risk are given higher index weights.
By emphasizing low volatility stocks, the MSCI Risk Weighted Indexes have historically exhibited lower realized volatility compared to their respective parent MSCI indexes, while maintaining reasonable liquidity and capacity.
Key Reasons to Invest
To focus a portion of international exposure primarily on capital preservation.
To position portfolios in stocks that have historically demonstrated significant downside protection.
Low volatility investing has historically resulted in superior risk-adjusted returns over time relative to the broad market.
1. As of Dec 31, 2016, as reported on March 31, 2017 by eVestment, Morningstar and Bloomberg.
2. Source: Morningstar Direct as of July 31, 2017
3. $2.3 billion in YTD net ETF creations within the International Equity category in Canada. 206% growth in net creations. Source: CETFA, as of July 31, 2017. $100 billion in YTD estimated ETF net flow within the International Equity category in the US. Source: Morningstar, as of July 31, 2017.