Freedom Investing in Review (March 2022)

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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 March 31, 2022. 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.

Last quarter, we saw that in 1-year returns ending December 31, 2021, Developed Freedom Investing had a -0.12% disadvantage, Emerging Market Freedom Investing had a +1.27% advantage, and Overall Freedom Investing had a +0.21% advantage.

In March 2022, our Investment Committee updated our Freedom Investing strategy for the new 2022 Index of Economic Freedom. For the purposes of this model, those changes are assumed to have been implemented during the March 1, 2022 rebalancing. You can read about those changes in “An Overview of Our Allocation Changes (March 2022).”

This quarter, we saw that in 1-year returns ending March 31, 2022, Developed Freedom Investing had a +1.44% advantage, Emerging Market Freedom Investing had a +2.07% advantage, and Overall Freedom Investing had a +1.28% advantage.

Ticker 3-Month 6-Month 9-Month 1-Year
iShares MSCI EAFE ETF (Market Return) EFA -6.46% -3.80% -4.86% 0.27%
Developed Freedom Investing -5.87% -2.89% -4.34% 1.70%
Australia FLAU 6.20% 10.79% 6.12% 12.92%
Austria EWO -15.13% -11.81% -8.49% 0.89%
Canada FLCA 5.33% 13.47% 11.28% 22.41%
Denmark EDEN -9.31% -5.98% -6.69% 4.91%
Finland EFNL -14.50% -11.74% -16.63% -7.47%
Hong Kong FLHK -4.62% -7.09% -17.34% -15.13%
Ireland EIRL -16.19% -17.73% -16.63% -12.52%
Netherlands EWN -15.71% -13.73% -12.31% -7.33%
New Zealand ENZL -6.58% -9.56% -8.02% -9.49%
Norway ENOR 4.66% 6.47% 8.38% 12.88%
Singapore EWS -2.57% -4.11% -6.05% -5.68%
Sweden EWD -16.15% -10.65% -13.64% -7.98%
Switzerland FLSW -6.88% 5.27% 1.45% 14.18%
United Kingdom FLGB -0.35% 4.57% 3.60% 9.11%
Ticker 3-Month 6-Month 9-Month 1-Year
Emerging Markets Freedom Investing -4.57% -4.02% -10.37% -6.83%
Emerging Markets VWO -6.46% -6.56% -13.14% -8.90%
Taiwan FLTW -7.28% 0.94% -1.44% 5.88%
South Korea FLKR -8.58% -10.66% -22.77% -18.78%
Chile ECH 25.90% 15.48% 3.61% -10.84%
Ticker 3-Month 6-Month 9-Month 1-Year
Overall Freedom Investing -5.31% -3.20% -6.50% -1.42%
iShares MSCI ACWI ex US ETF (Market Return) ACWX -5.99% -4.11% -7.61% -2.69%

 

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 by Jitian Pan on Unsplash. Returns data gathered from Morningstar Advisor Workstation.

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Chief Operating Officer, 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 700 financial articles. Her most popular post is "The Complete Guide to Your Washing Machine" while one of her favorites is "Funding a 3-Year-Old’s Roth IRA."