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 September 30, 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 June 30, 2023, Developed Freedom Investing had a -3.68% disadvantage, Emerging Market Freedom Investing had a +4.15% advantage, and Overall Freedom Investing had a -0.61% disadvantage.
This 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.
|iShares MSCI EAFE ETF (Market Return)||EFA||-4.94%||-1.85%||6.94%||25.82%|
|Developed Freedom Investing||-5.17%||-4.63%||1.80%||21.05%|
|Emerging Markets Freedom Investing||-3.92%||-1.78%||3.88%||14.68%|
|Emerging Markets ex-China||XCEM||-4.13%||1.37%||7.32%||19.76%|
|Overall Freedom Investing||-4.70%||-3.52%||2.64%||18.78%|
|iShares MSCI ACWI ex US ETF (Market Return)||ACWX||-4.49%||-2.02%||5.02%||20.41%|
Photo of Norway by Jarand K. Løkeland on Unsplash. Image has been cropped. Returns data gathered from Morningstar Advisor Workstation.