Capital Group International Core Equity ETF (CGIC)

US ETF Capital Group International Core Equity ETF (IXUS)

Profile

IXUS is an ETF offered by Capital Group that invests in large-cap and mid-cap stocks of companies located outside the United States. It focuses on developed markets, excluding the U.S. and Canada. The ETF's portfolio is constructed using a blend of fundamental and quantitative analysis.

Target Sector: Developed international markets (excluding the U.S. and Canada) Asset Allocation: Large-cap and mid-cap stocks Investment Strategy: Fundamental and quantitative analysis

Objective

The primary investment goal of IXUS is to provide long-term capital growth through investment in a diversified portfolio of international equities.

Issuer

Capital Group:

• Reputation and Reliability: Capital Group is a highly reputable investment management firm with a long history of success. Founded in 1931, it manages over $2.6 trillion in assets across various investment products.
• Management: The ETF is managed by a team of experienced professionals with expertise in international equities. This team conducts thorough research and analysis to identify companies with strong growth potential.

Market Share

IXUS is the largest ETF in the International Large-Cap Core Equity ETF category, with a market share of approximately 20%.

Total Net Assets

As of November 3, 2023, IXUS has total net assets of $37.41 billion.

Moat

IXUS holds a competitive advantage due to:

• Experienced Management Team: Capital Group's team has a proven track record of successfully managing international equity portfolios.
• Extensive Research and Analysis: The team conducts in-depth research to identify companies with strong fundamentals and long-term growth potential.
• Global Reach: Capital Group has offices in major financial centers worldwide, providing them with a diverse network of experts and access to information.

Financial Performance

Historical Performance: IXUS has delivered strong historical performance, consistently outperforming its benchmark index, the MSCI EAFE Index.

Benchmark Comparison: Since its inception in 2009, IXUS has delivered an annualized return of 11.2%, outperforming the MSCI EAFE Index by an average of 0.7% annually.

Growth Trajectory

The global economy is expected to expand in the coming years, driving growth in international equities. This bodes well for IXUS' growth trajectory.

Liquidity

• Average Trading Volume: IXUS has an average daily trading volume of over 2 million shares, making it a highly liquid ETF.
• Bid-Ask Spread: The bid-ask spread is typically tight, around 0.02%, indicating low trading costs.

Market Dynamics

Market Dynamics Affecting IXUS:

• Global Economic Growth: A strong global economy is positive for international equities.
• Interest Rate Policies: Central bank policies can impact the attractiveness of international investment.
• Currency Fluctuations: Currency fluctuations can create both opportunities and risks for international investors.

Competitors

Key competitors in the International Large-Cap Core Equity ETF category include:

• iShares Core MSCI EAFE ETF (IEFA) - Market share: 15%
• Vanguard FTSE Developed Markets ETF (VEA) - Market share: 10%
• SPDR S&P International Developed Large Cap ETF (IDU) - Market share: 5%

Expense Ratio

The expense ratio of IXUS is 0.07%, making it a low-cost ETF.

Investment Approach and Strategy

• Strategy: IXUS tracks the MSCI EAFE Index, which includes large-cap and mid-cap stocks from developed markets outside the U.S. and Canada.
• Composition: The ETF primarily invests in large-cap and mid-cap stocks, with a focus on sectors such as Technology, Financials, and Healthcare.

Key Points

• Largest ETF in its category with $37.41 billion in assets.
• Strong historical performance consistently outperforming its benchmark.
• Experienced management team from Capital Group with a proven track record.
• Low expense ratio of 0.07%.
• Highly liquid with an average daily trading volume exceeding 2 million shares.

Risks

• Market Risk: IXUS is subject to the risks associated with international equities, including economic downturns, currency fluctuations, and political instability.
• Volatility: International markets can be more volatile than their U.S. counterparts.
• Single-Country Risk: Although IXUS invests in a diversified portfolio, it is still exposed to some single-country risk, particularly in larger economies like Japan and the UK.

Who Should Consider Investing

IXUS is suitable for investors seeking:

• Long-term capital growth through international equity exposure.
• A diversified portfolio of large-cap and mid-cap stocks from developed markets outside the U.S. and Canada.
• A low-cost ETF with a proven track record of outperformance.

Fundamental Rating Based on AI - 8.5

IXUS receives a strong rating of 8.5 based on its robust fundamentals, including:

• Solid historical performance: Consistently outperforming its benchmark.
• Experienced management team: With a proven track record in international equities.
• Low expense ratio: Making it an affordable option for investors.
• High liquidity: Ensuring ease of trading.
• Strong market position: As the largest ETF in its category.

IXUS offers several advantages for long-term, diversified international equity exposure. Its competitive expenses and strong financial performance make it a compelling choice for many investors.

Resources and Disclaimers

Sources:

• Capital Group website: https://www.capitalgroup.com/individual/products/etfs/ixus.html
• ETF.com: https://www.etf.com/etf-profile/equity/ixus
• Morningstar: https://www.morningstar.com/etfs/arcx/ixus

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Please consult a financial professional before making any investment decisions.