By ETF Heat Map Team
Politics is taking a path that could have a very detrimental effect on the global economy for years to come. According to the IMF, if steps are not imposed to curb newly emerging challenges and trends then the global economy might stagnate going forward. The IMF has made specifically targeted these comments towards the developed nations and as such we quickly preview some of the higher quality Developed ETFs available in the ETF Heat Map screener for investors:
- URTH, iShares MSCI World ETF
- IDLV, PowerShares S&P International Developed Low Volatility Portfolio ETF
- IDOG, ALPS International Sector Dividend Dogs ETF
URTH (iShares MSCI World ETF), which is an iShares product is classified as a developed ETF in our database. It attempts to provide exposure to a broad range of developed market companies around the world. It has averaged annual returns of approximately 10% since inception in January 2012. It has an expense ratio of 0.24% and 30 SEC yield of 2.2%.
IDLV (PowerShares S&P International Developed Low Volatility Portfolio), a PowerShares product is classified as a Developed ETF in our database. Its’ index consists of the 200 least volatile stocks of the S&P Developed ex. US and South Korea LargeMid Cap BMI Index over the past 12 months. It has an expense ratio of 0.35% and 30 SEC yield of 3.03%.
Some of the main issues that will be under discussion in the G20 summit to be held in Hangzhou, China over the weekend include high levels of inequality, low growth rate and dawdling progress on structural development. The caucus comes at a very crucial time in the world’s economic history. After having exhausted the impact of monetary policy, governments are reassessing their approach towards economic growth, healthy levels of inflation, and fair competition.
In the developed countries, real growth is also being affected since they recorded a below average rate in 2016 in relation to the 1990-2007 average, and expect a historically below predicted global long range global growth rate of 3.7% in 2017 and in the years to come. Many economies are still struggling with an inherited crisis heritage of which include long term debts in the private and public sectors, and impaired financial records (balances) in banking institutions. This has led to a decrease in demand that has remained weak for a long time.
The longer the demand remains weak, the more likely that longer term development is affected since companies are compelled to cut their production, which leads to an increased unemployment rate, and important skills are wasted. Low demand also suppresses trade which reduces the growth in the manufacturing sector even further.
The supply side also surfers adversely since when production slows down, demographic trends affect potential growth negatively. This eventually will deter even the short term growth projections and productivity as most average firms will not be able to increase investments or capitalize on the situation on hand.
As such we have decided to preview certain Developed ETFs that hold high quality companies run by great allocators of capital that will benefit regardless of the economic circumstances.