Designed to help investors build broader equity portfolios

JXUS taps into growing demand from investors looking to reduce their equity exposure to US growth stocks, via an actively managed, MSCI World ex USA benchmarked portfolio that benefits from the same approach that lies behind our successful $30 billion-plus Research Enhanced Index ETF range.

The premise is simple. The dramatic rise of US mega-cap technology stocks in recent years, as well as similar tech-led growth in Asia, has led to extreme levels of regional and sector concentration in global equity portfolios. US stocks now account for some three quarters of the MSCI World Index, and the technology sector has a 30% weighting, at the time of writing.

But it doesn’t need to be this way. Investors do not need to accept the US or the tech sector as the default drivers of their global equity outcomes.

By allocating to developed markets outside the US, the MSCI World ex USA Index can help investors diversify their US equity exposure and achieve a more balanced portfolio.

Putting “global” back into global equities

Over half of the “ex-US” benchmark is invested in Europe, including the UK, and a further fifth of the index is invested in Japan. This compares to weightings of around 16% and 5%, respectively, in the MSCI World Index. The sector mix is also very different, allowing investors to access a more diversified set of earnings and economic drivers, with less sensitivity to technology and the whole AI investment theme.

Take Europe, which provides global equity investors with exposure to the return potential of the region’s large and high quality financials, industrials and materials sectors. And also Japan, where returns are being driven as much by shareholder activism and corporate reforms as tech spending.

With resource-heavy Canada and Australia, as well as Hong Kong and Singapore, also having greater prominence, the ex-US index has a very different index composition compared to both the MSCI World and S&P 500. For investors worried about high US weightings in their portfolios, this different return profile could potentially smooth outcomes in periods when US performance is more volatile.

Global ex US exposure enhanced by fundamental research DNA

Until now, passive ETFs have been the only way for UCITS investors to access the global ex US opportunity set. However, JXUS stands out thanks to its active approach, which makes it one of the first active global ex US ETF available to the UCITS market.

JXUS is the latest in our range of Research Enhanced Index (REI) equity ETFs. Our REI process has a long track record, applying the stock-specific insights of our global team of research analysts to low tracking error portfolios for nearly four decades. This time-tested active approach takes a diversified set of small active positions based on our fundamental research, spreading active risk over a broad range of stocks while maintaining indexlike characteristics through robust regional, sector and style constraints. We believe our ability as active stock pickers makes JXUS particularly well-suited to the global ex-US benchmark, where opportunities are spread across markets, and where regional, sector and stock dispersion can be wide. Our analysts are able to seek out attractively valued stocks across global markets based on their rigorous fundamental research, with their longterm return forecasts constantly updated for around 2,500 stocks around the world. With strict portfolio controls designed to minimise stock, sector and style risk, the aim is to produce consistent excess returns that are driven by our analysts’ stock recommendations.

The result is a highly diversified, low tracking error portfolio that can provide investors with reliable and cost-effective global ex US exposure, with the potential to earn incremental excess returns over the long term.

Helping investors to adjust global equity allocations

With JXUS, investors can get access to global markets outside of the US where valuations are lower and drivers of returns may be less dominated by the technology sector. Investors can also benefit from the advantages of active stock selection in global markets, while maintaining reliable index exposure.

It’s this research-enhanced approach, in combination with the global ex-US benchmark, that makes JXUS such an appealing opportunity. Whether used as a complement to a separate US equity allocation, or as a diversifier to an existing core MSCI World allocation, JXUS gives investors the ability to dial up exposure to the markets and sectors that have been crowded out by US dominance in traditional global equity benchmarks.