In the beginning of 2023, investors were cautiously optimistic about inflation cooling down and anticipated interest rate cuts, while also keeping an eye out for signs of an economic recession and lower corporate earnings. However, the economy outperformed these expectations, driven by higher-than-expected consumer savings, increased fiscal spending, and looser financial conditions. This led to a 25% increase in the S&P 500 Index in 2023, bringing the benchmark close to its record high from January 2022. The enthusiastic market rally at the end of 2023 has resulted in overvalued stocks, particularly as investors were encouraged by the Federal Reserve's indication in December that rate cuts could be imminent.
Looking ahead, Morgan Stanley’s Global Investment Committee suggests that investors should adopt a more cautious approach, as 2024 is more likely to be an average year for markets rather than another year of double-digit growth. Analysts are predicting 2024 US corporate earnings to be around $242 per share, assuming that companies will continue to expand their profit margins. However, this estimate may be overly optimistic, considering that US economic growth is expected to taper off from last year's rapid pace of about 7% to around 4% this year. This slowdown could lead to a decrease in sales volume and pricing power for companies. Additionally, corporations may have already realized the benefits of lower manufacturing costs and declining oil and raw material prices, which may not contribute as significantly to improved margins in the future. Morgan Stanley believes that 2024 should be a time for balance, both for investors' expectations and their portfolios.
Looking at the international landscape, economists predict that the European economy is poised for a year of transition after a turbulent 2023, with key challenges like high inflation and increasing interest rates expected to diminish. CNBCnoted that despite the challenging economic conditions in the Eurozone, the pan-European Stoxx 600 stock index ended the year 12.6% higher, driven by optimism about potential monetary policy changes in 2024 by the US Federal Reserve and the European Central Bank. Stock markets in Europe and globally have started 2024 on a more uncertain note, awaiting new data and signals from central banks. Global markets saw a rally in the final months of 2023, as bond yields retreated on hopes that the Fed and ECB would start cutting interest rates early in 2024. However, the ECB has not yet indicated any immediate easing of policy, despite market expectations for a rate cut in March. Jari Stehn, Chief European Economist at The Goldman Sachs Group, Inc. (NYSE:GS), commented:
“While wage growth is still firm and the labour market remains resilient, we expect both to soften in 2024 and look for core inflation to reach 2% year-on-year in [the fourth quarter of 2024], much earlier than projected by the ECB. As a result, we see earlier and faster policy rate cuts than implied by the Governing Council’s recent communication.”
Moreover, the Chinese economy in 2023 faced challenges as it emerged from COVID lockdown. Initially, there was a surge in business activity, especially in the services sector. However, this boost was short-lived, and the property market's troubles intensified. The distress faced by Country Garden Services Holdings Company Limited, one of China's major private developers, had a ripple effect, shaking business and investor confidence. The property market woes spilled over into consumer sentiment and strained local government finances. To address these issues, policymakers took steps such as policy rate cuts and fiscal support. These measures helped soften the economic impact but did not lead to a significant uptick in economic activity. As we enter 2024, there are known challenges ahead, but uncertainty remains about the future. While policymakers have outlined their goals and plans, there are doubts about how these will be implemented and their effectiveness.
In South Asia, India's $4 trillion stock market is attracting significant investments from both domestic and foreign investors, positioning itself as a rapidly growing alternative to China. Despite concerns about overpriced shares, upcoming elections, and regulatory uncertainties, investors are showing confidence in India's market potential. The NSE Nifty 50 Index has surged by a third in the past months, with foreign inflows reaching $20 billion in 2023, according to India's national depository data. In 2024, India's appeal is increasing as global investors seek alternatives to Chinese markets. There is also growing anticipation that the national elections this year will result in Prime Minister Narendra Modi securing a third term, further bolstering investor confidence in India's economic prospects.
Similarly, the Japanese stock market had a remarkable 2023, with the Nikkei 225 Index posting its fastest gain in a decade, reaching its highest level since the end of Japan's bubble economy in 1989. The Tokyo Stock Price Index also saw a rise, marking its fourth-best annual performance since 2001 by mid-November 2023 in local currency terms. As perForbes, the positive trend in Japanese equities is expected to continue in 2024, supported by favorable market conditions and regulatory environment, along with backing from influential investors. Despite global challenges such as high interest rates, sluggish economic growth, and persistent inflation, major institutional investors like BlackRock remain optimistic about Japan's prospects. BlackRock announced in September 2023 that it would increase its investment in the world's second-largest economy. The BlackRock Institute stated:
“We turn even more positive on Japanese equities, going overweight due to strong earnings, share buy backs and other shareholder-friendly corporate reforms.”
This article discusses some of the best performing sector and international ETFs that provide investors with access to stocks like NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and ATI Inc. (NYSE:ATI).
Our Methodology
We curated our list of the best sector and international ETFs by selecting consensus picks from multiple credible websites, focusing on ETFs with strong 5-year share price performance. We have mentioned the 5-year share price performance of each ETF as of March 15, 2024, ranking the list in ascending order of the share price. We have also discussed the top holdings of the ETFs to offer better insight to potential investors.
Diversified Stock Portfolio: 11 Sector ETFs and International ETFs To Buy
A portfolio manager in an open-plan trading floor, demonstrating the company's financial agility.
Diversified Stock Portfolio: Sector ETFs and International ETFs To Buy
11. SPDR EURO STOXX 50 ETF (NYSE:FEZ)
5-Year Share Price Performance as of March 15: 44.02%
The SPDR EURO STOXX 50 ETF (NYSE:FEZ) aims to mirror the total return performance of the EURO STOXX 50 Index, which represents some of the largest companies in the 20 EURO STOXX Supersector Indexes. Launched on October 15, 2002, the ETF has assets under management totaling $3.28 billion as of March 14, 2024, with its portfolio comprising 50 stocks. The fund has a gross expense ratio of 0.29% as of March 17, 2024.
ASML Holding N.V. (NASDAQ:ASML) is the top holding of the SPDR EURO STOXX 50 ETF (NYSE:FEZ). The company specializes in the development, production, marketing, sale, and maintenance of advanced semiconductor equipment systems used by semiconductor manufacturers.
According to Insider Monkey’s fourth quarter database, 62 hedge funds were bullish on ASML Holding N.V. (NASDAQ:ASML), up from 57 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management held the largest position in the company, with 4.97 million shares valued at $3.76 billion.
In addition to NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and ATI Inc. (NYSE:ATI), ASML Holding N.V. (NASDAQ:ASML) is one of the best stocks to add to your stock portfolio.
Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”
10. BNY Mellon International Equity ETF (NYSE:BKIE)
5-Year Share Price Performance as of March 15: 46.57%
The BNY Mellon International Equity ETF (NYSE:BKIE) aims to mirror the performance of the Solactive GBS Developed Markets ex United States Large & Mid Cap Index NTR. It offers investors exposure to global stocks through a passively managed, low-cost index strategy with full portfolio transparency, making it a good pick for investors’ stock portfolio. Launched on April 22, 2020, the fund has amassed net assets amounting to $616.37 million as of March 15, 2024, with an expense ratio of 0.04%. Its portfolio comprises 1029 stocks as of February 29, 2024.
Novo Nordisk A/S (NYSE:NVO) is the largest holding of the BNY Mellon International Equity ETF (NYSE:BKIE).The company conducts research, develops, manufactures, and distributes pharmaceutical products worldwide. On March 7, Novo Nordisk A/S (NYSE:NVO)'s stock reached a record peak, with shares climbing as much as 7.5% following positive outcomes from an initial clinical study of its new oral weight-loss medication, Amycretin.
As per Insider Monkey’s fourth quarter database, 58 hedge funds were bullish on Novo Nordisk A/S (NYSE:NVO), compared to 51 funds in the previous quarter. Ken Fisher’s Fisher Asset Management is the largest position holder in the company, with 14.13 million shares worth $1.46 billion.
Polen Global Growth Strategy stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its fourth quarter 2023 investor letter:
“As we discussed in last quarter’s commentary, Novo Nordisk A/S (NYSE:NVO) is a newer addition to the strategy. Over the fourth quarter, we continued to build the position to an average weight. As a reminder, Novo Nordisk is a global pharmaceutical company based in Denmark and has long been the leader in developing insulin for diabetes patients. In recent years, the company’s innovation into GLP-1 drugs has been shown not only to help diabetics control blood sugar levels but also to have significant efficacy in weight loss. Obesity has become a global epidemic, creating materially negative knock-on effects for humans that range from an increase in cardiovascular events and, thus, higher mortality to a lower general quality of life. We believe that, over time, payors will recognize the value of these obesity treatments to both patients and the overall healthcare system.”
9. Franklin FTSE India ETF (NYSE:FLIN)
5-Year Share Price Performance as of March 15: 57.42%
The Franklin FTSE India ETF (NYSE:FLIN) is a valuable addition to any stock portfolio, offering a cost-effective way for investors to access the Indian stock market, specifically targeting large and mid-sized companies. It aims to closely mirror the performance of the FTSE India Capped Index. Launched on February 6, 2018, the fund holds $821.95 million in net assets as of March 17, 2024. It has a portfolio of 213 stocks, and the fund’s expense ratio stands at 0.19% as of August 1, 2023.
Reliance Industries Limited (NSE:RELIANCE) is the largest holding of the Franklin FTSE India ETF (NYSE:FLIN). Reliance Industries Limited (NSE:RELIANCE) is involved in businesses worldwide, including exploration and production of hydrocarbons, oil and chemicals, textiles, retail, digital services, renewable energy, and financial services.
8. Vanguard Industrials Index Fund ETF (NYSE:VIS)
5-Year Share Price Performance as of March 15: 73.19%
Ranked 8th on our list of ETFs for a diversified stock portfolio, the Vanguard Industrials Index Fund ETF (NYSE:VIS) aims to mirror the performance of the MSCI US Investable Market Industrials 25/50 Index. It includes companies that specialize in transforming raw materials into finished goods for use in manufacturing or services. Introduced on September 23, 2004, the fund has net assets totaling $5.3 billion as of February 29, 2024, and its portfolio comprises 391 stocks. Its expense ratio, as of December 22, 2023, stands at 0.10%.
General Electric Company (NYSE:GE) is the largest holding of the Vanguard Industrials Index Fund ETF Shares (NYSE:VIS). The company functions as a modern industrial firm with operations spanning across Europe, China, Asia, the Americas, the Middle East, and Africa. On January 23, General Electric Company (NYSE:GE) announced a Q4 non-GAAP EPS of $1.03 and a revenue of $19.4 billion, beating market consensus by $0.13 and $1.85 billion, respectively.
As per Insider Monkey’s fourth quarter database, 92 hedge funds were bullish on General Electric Company (NYSE:GE), an increase from 76 funds in the previous quarter. Chris Hohn’s TCI Fund Management is the top position holder in the company, with 41.65 million shares valued around $5.32 billion.
Longleaf Partners Fund stated the following regarding General Electric Company (NYSE:GE) in its fourth quarter 2023 investor letter:
“General Electric Company (NYSE:GE) – Industrial conglomerate General Electric (GE) was the top performer for the year. We exited this multi-year investment as its price went above our appraisal. In 1Q23, GE spun out GE Healthcare, which we sold as it traded at our value. The share price continued its strong performance throughout the spring and summer, and we ultimately sold the position in the third quarter when we no longer saw a margin of safety for the business. CEO Larry Culp was a great partner who created significant value for shareholders by reducing leverage, cutting costs, streamlining operations, improving company culture and simplifying the structure with plans to split the company into three businesses. We hope to have the opportunity to partner with him again in the future.”
7. Franklin FTSE Taiwan ETF (NYSE:FLTW)
5-Year Share Price Performance as of March 15: 78.11%
The Franklin FTSE Taiwan ETF (NYSE:FLTW) comprises companies from Taiwan's stock market, offering investors an efficient and cost-effective way to invest in Taiwan. It focuses on large and mid-sized companies in Taiwan, aiming to closely mirror the performance of the FTSE Taiwan Capped Index. The Franklin FTSE Taiwan ETF (NYSE:FLTW) is one of the best picks for investors looking to diversify their stock portfolios. Launched on November 2, 2017, the ETF has net assets totaling $221.10 million as of March 17, 2024. Its portfolio includes 119 stocks as of March 14, 2024, and its expense ratio, as of August 1, 2023, is 0.19%.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest holding of the Franklin FTSE Taiwan ETF (NYSE:FLTW). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) produces and sells integrated circuits and semiconductor devices worldwide. On March 15, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) declared a $0.554 per share quarterly dividend. It is to be paid on April 11 to shareholders on record as of March 19.
According to Insider Monkey’s fourth quarter database, 105 hedge funds were bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), compared to 107 funds in the prior quarter.
Polen International Growth Strategy stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its fourth quarter 2023 investor letter:
“The largest relative detractors to the Portfolio’s performance during the fourth quarter were Aon Plc, Unilever Plc, and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) (not owned). Though we do not currently own it in the Portfolio, Taiwan Semiconductor was one of the larger relative detractors from performance during the quarter due to its strong performance and comparatively greater index weight.”
6. iShares U.S. Oil & Gas Exploration & Production ETF (BATS:IEO)
5-Year Share Price Performance as of March 15: 79.11%
The iShares U.S. Oil & Gas Exploration & Production ETF (BATS:IEO) aims to reflect the performance of the Dow Jones U.S. Select Oil Exploration & Production Index, which consists of US stocks in the oil and gas exploration and production sector. Introduced on May 1, 2006, the ETF has net assets amounting to $728.03 million as of March 15, 2024. Its portfolio comprises 47 stocks as of March 14, 2024, and it has an expense ratio of 0.40%.
ConocoPhillips (NYSE:COP) is the top holding of the iShares U.S. Oil & Gas Exploration & Production ETF (BATS:IEO). ConocoPhillips (NYSE:COP) engages in the exploration, production, transportation, and marketing of crude oil, bitumen, natural gas, LNG, and natural gas liquids. On February 8, ConocoPhillips (NYSE:COP) reported a Q4 non-GAAP EPS of $2.40, outperforming Wall Street estimates by $0.23, and a revenue of $15.31 billion, missing estimates by $848.80 million.
According to Insider Monkey’s fourth quarter database, 59 hedge funds were bullish on ConocoPhillips (NYSE:COP), in contrast to the prior quarter when 62 funds had invested in the stock. Boykin Curry’s Eagle Capital Management is the top shareholder of the company, with a position comprising 13.29 million shares valued at $1.54 billion.
Like NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and ATI Inc. (NYSE:ATI), ConocoPhillips (NYSE:COP) is one of the best stocks to add to your stock portfolio.
Oakmark Select Fund made the following comment about ConocoPhillips (NYSE:COP) in its second quarter 2023 investor letter:
“ConocoPhillips (NYSE:COP) is one of the largest and most efficient exploration and production companies in the country. The company has an extensive resource base of high-quality drilling inventory in the U.S. and various international locations as well as a growing liquified natural gas business. In our view, the depth and quality of ConocoPhillips’s inventory is a competitive differentiator that is not fully captured in today’s share price. Over the next 10 years, we believe ConocoPhillips will be able to return more than 100% of its current market cap to shareholders via dividends and share repurchases while growing its production at a mid-single-digit annual pace. We believe ConocoPhillips is also among the best managed companies in the oil and gas industry and we are impressed by its history of accretive capital allocation under CEO Ryan Lance. The stock has meaningfully underperformed the broader market year-to-date and is an attractive addition to our portfolio.”
