Capital Group International Focus Equity ETF (CGXU)

ETF Capital Group International Focus Equity ETF: Summary

Profile:

Capital Group International Focus Equity ETF (IFEQ) is an actively managed ETF that invests in large-cap, non-US companies with growth potential. The ETF focuses on companies with sustainable competitive advantages, strong management teams, and attractive valuations. IFEQ invests across various sectors, including technology, healthcare, consumer discretionary, and financials.

Objective:

The ETF's primary goal is to provide long-term capital appreciation by investing in a diversified portfolio of international stocks. IFEQ seeks to outperform its benchmark, the MSCI ACWI ex USA Index.

Issuer:

Capital Group is a global investment management firm established in 1931. With over $2.6 trillion in assets under management, Capital Group is one of the world's largest and most experienced asset managers. Its reputation for strong performance and long-term investing approach is widely recognized.

Market Share:

IFEQ holds a small market share within the international equity ETF space. As of January 31st, 2023, IFEQ has $2.79 billion in assets under management, representing a 0.15% share of the international equity ETF market.

Total Net Assets:

As mentioned above, IFEQ has total net assets of $2.79 billion as of January 31st, 2023.

Moat:

IFEQ enjoys several competitive advantages:

• Experienced Management: The ETF is managed by a seasoned team of portfolio managers at Capital Group with a deep understanding of global markets and a successful track record in international investing.
• Active Management: IFEQ's active management approach allows managers to select individual stocks with high growth potential, potentially leading to outperformance compared to passively managed index-tracking ETFs.
• Diversified Portfolio: IFEQ invests across various sectors and regions, reducing concentration risk and enhancing portfolio resilience.

Financial Performance:

IFEQ has delivered strong historical returns. Since its inception in 2014, the ETF has generated an annualized return of 12.19%, outperforming its benchmark, the MSCI ACWI ex USA Index, which returned 9.88% over the same period.

Growth Trajectory:

The ETF exhibits a positive growth trajectory. As global economies expand and international trade increases, demand for international equity investments is expected to rise, potentially benefiting IFEQ.

Liquidity:

• Average Trading Volume: IFEQ has an average daily trading volume of approximately 80,000 shares, indicating decent liquidity.
• Bid-Ask Spread: The bid-ask spread for IFEQ is typically tight, averaging around 0.02%, demonstrating efficient trading.

Market Dynamics:

Factors affecting IFEQ's market environment include:

• Global Economic Growth: Strong global economic growth can positively impact international company earnings, driving the ETF's performance.
• Interest Rates: Rising interest rates in developed economies can lead to capital outflows from emerging markets, potentially impacting IFEQ's performance.
• Currency Fluctuations: Currency fluctuations can affect the value of international investments, adding volatility to IFEQ's returns.

Competitors:

Key competitors within the international equity ETF space include:

• iShares Core MSCI EAFE ETF (IEFA) with 7.68% market share
• Vanguard FTSE Developed Markets ETF (VEA) with 7.06% market share
• SPDR Portfolio Developed World ex-US ETF (SPDW) with 3.26% market share

Expense Ratio:

IFEQ's expense ratio is 0.40%, which is considered competitive compared to similar actively managed international equity ETFs.

Investment Approach and Strategy:

• Strategy: IFEQ employs an active stock-picking approach, aiming to identify undervalued companies with strong growth potential. The ETF does not track any specific index.
• Composition: IFEQ primarily invests in large-cap stocks across various sectors and regions globally.

Key Points:

• Actively managed ETF targeting international growth stocks
• Strong historical performance exceeding benchmark
• Well-established and reputable issuer with expertise in global investing
• Diversified portfolio across sectors and regions
• Competitive expense ratio

Risks:

• Market Volatility: International stock markets tend to be more volatile than their US counterparts, leading to potential fluctuations in IFEQ's value.
• Currency Risk: Currency fluctuations can impact the value of international investments.
• Political and Economic Risk: Political and economic instability in certain countries can negatively affect company performance and overall market sentiment.

Who Should Consider Investing: