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International Exposure without the U.S. and China

As coronavirus cases start to rack up again and geopolitical events take hold of North America, getting international exposure requires an even more discerning eye. Investors who want pure international exposure to Europe, Australia, Asia, and the Far East alone can consider the iShares MSCI EAFE Small-Cap ETF (SCZ).

As mentioned, SCZ presents an interesting pure play small cap option in that it excludes equities in the United States and China. Certain geopolitical events in the aforementioned countries can be avoided, such as the recent U.S. presidential election, giving investors a measure of safety in terms of volatility as small-caps tend to be more prone to market movements as opposed to their larger cap brethren.

SCZ seeks to track the investment results of the MSCI EAFE Small Cap Index composed of small-capitalization developed market equities. The fund generally will invest at least 90% of its assets in the component securities of the underlying index and in investments that have economic characteristics that are substantially identical to the component securities of the underlying index ,which represents the small-capitalization segment of the MSCI EAFE IMI Index.

All in all, SCZ gives investors:

  1. Exposure to small public companies in Europe, Australia, Asia and the Far East
  2. Access to a specific segment of the developed international stock market
  3. Use to diversify an international stock allocation and express a view on small-cap stocks

Looking at SCZ’s year-to-date chart, the fund has almost bounced back to pre-pandemic levels:

SCZ Chart

“Obviously, things can change at a moment’s notice, but, for now, bullish momentum has become a driving force,” a Penny Stocks article noted. “With that, comes a sort of “safer feeling” that it’s “okay” to take on more risk. During times of upbeat activity, investors tend to search for higher risk trades in front of the backdrop of a market that is moving higher.”

“Supporting this idea is the small-cap ETFs. The Russell 2000 (IWM Report) saw an explosive move on November 4th,” the article said further. “This took the ETF from around $155 during pre-market to highs of $1.62.35 during mid-day trading. So are small-caps finally back in play? You be the judge. Keeping this in mind, are any of these trending names on your list of penny stocks to buy right now?”

For more news and information, visit the Equity ETF Channel.

Read More: International Exposure without the U.S. and China

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