Freedom Investing in Review (December 2023)

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We have been advocating Freedom Investing since 2004. Every year, The Heritage Foundation evaluates all the world’s countries using their Index of Economic Freedom, where a high score correlates to nearly every positive measure of a country. We then use this ranking and efficient frontier analysis to craft our Foreign Stock investment strategy that we call “Freedom Investing.”

This article is part of my series where I review how Freedom Investing performs for the quarter. In this analysis, I have used the actual products we are investing in rebalanced monthly to our static asset allocation targets with returns ending December 31, 2023. This analysis does not reflect our dynamic tilt or our individual stock foreign health care strategy, both of which we implement in client portfolios.

For benchmarks, I have used actual products as comparison. The EAFE (EFA) should be compared to Developed Freedom Investing, Emerging Market (VWO) should be compared to Emerging Market Freedom Investing, and the All World ex-US (ACWX) should be compared to the Overall Freedom Investing.

In March 2023, our Investment Committee updated our Freedom Investing strategy for the new 2023 Index of Economic Freedom. For the purposes of this model, those changes are assumed to have been implemented during the March 1, 2023 rebalancing. You can read about those changes in “2023 Index of Economic Freedom Update.”

In July 2023, our Investment Committee changed our emerging market strategy to reduce our exposure to China by adding an ex-China fund. For the purposes of this model, those changes are assumed to have been implemented during the July 1, 2023 rebalancing. You can read more about those changes in “Adding an Ex-China Fund to Our Emerging Market Strategy (July 2023).”

Last quarter, we saw that in 1-year returns ending September 30, 2023, Developed Freedom Investing had a -4.77% disadvantage, Emerging Market Freedom Investing had a +3.89% advantage, and Overall Freedom Investing had a -1.63% disadvantage.

This quarter, we saw that in 1-year returns using the dynamic tilt and ending December 31, 2023, Developed Freedom Investing had a -4.21% disadvantage, Emerging Market Freedom Investing had a +4.78% advantage, and Overall Freedom Investing had a -1.46% disadvantage.

You can find our articles reviewing the performance of Freedom Investing here.

Ticker 3-Month 6-Month 9-Month 1-Year
iShares MSCI EAFE ETF (Market Return) EFA 10.71% 5.25% 8.66% 18.40%
Developed Freedom Investing 12.41% 6.76% 7.18% 14.19%
Australia FLAU 14.66% 9.48% 9.96% 12.58%
Austria EWO 13.30% 9.69% 13.22% 20.65%
Canada FLCA 12.20% 6.94% 10.85% 14.73%
Denmark EDEN 11.92% 5.30% 7.95% 17.99%
Finland EFNL 12.33% 4.09% -2.69% -0.10%
Ireland EIRL 13.42% 6.36% 12.56% 35.12%
Netherlands EWN 18.27% 3.90% 7.75% 22.10%
New Zealand ENZL 11.77% 1.07% 0.14% 2.99%
Norway ENOR 3.68% 10.20% 8.70% 2.98%
Singapore EWS 5.01% 4.11% 0.66% 6.23%
Sweden EWD 22.67% 14.19% 13.80% 25.10%
Switzerland FLSW 11.05% 4.54% 8.74% 16.78%
United Kingdom FLGB 7.37% 5.15% 8.09% 14.38%
Ticker 3-Month 6-Month 9-Month 1-Year
Emerging Markets Freedom Investing 9.82% 5.51% 7.84% 14.05%
Emerging Markets VWO 7.08% 4.05% 5.35% 9.27%
Emerging Markets ex-China XCEM 11.78% 7.17% 13.31% 19.96%
Taiwan FLTW 16.30% 10.01% 14.67% 30.09%
South Korea FLKR 13.42% 6.41% 10.51% 19.18%
Chile ECH 8.41% -2.70% 2.58% 8.98%
Ticker 3-Month 6-Month 9-Month 1-Year
Overall Freedom Investing 11.43% 6.29% 7.48% 14.20%
iShares MSCI ACWI ex US ETF (Market Return) ACWX 10.14% 5.19% 7.91% 15.67%

For more information about Freedom Investing, you may enjoy reading “A 25-Year Review of Freedom Investing” or “Risk-Return Analysis of Freedom Investing.”

Photo of Sweden by Mikael Stenberg on Unsplash. Image has been cropped. Returns data gathered from Morningstar Advisor Workstation.

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Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.