Economic Exposure Indexes: Investable Alternatives for Global World in Flux

Publication: The Journal of Beta Investment Strategies – Volume 14 Issue 2, May 31, 2023

Abstract: 
The inexorable globalization trend has been halted by the COVID-19 pandemic, heightened geopolitical tension, the war in Ukraine, and inflation on a global scale. While it is unimaginable to expect a fully deglobalized world – there are now structural trends toward localization. The impact of global and local macro drivers will impact businesses depending on their dominant business exposure. Investors, who want to capture these differences that may result in divergent trends, will need a targeted approach that segments companies within a country or region by their revenue exposure to global or local drivers. Defining Global and Domestic economic exposure indexes will allow investors to supplement or diversify their Country/Regional exposure or take tactical investment actions to add alpha.

Key Takeaways:

  • Globalization is in flux – oscillating between globalization and de-globalization forces, with de-globalization currently the prevailing trend
  • Increased cycles of global vs domestic dominance will drive divergence within the country and regional performance
  • Using country or regional indexes structured around economic exposure provides investors with a more precise, targeted investment solution for a world in flux

Authors: 
Josh Kaplan – jkaplan@marketvector.com Josh is Head of Research at MarketVector IndexesTM. 
Steven Schoenfeld – sschoenfeld@marketvector.com, Steven is Chief Executive Officer at MarketVector IndexesTM.
Joy Yang – jyang@marketvector.com  - Joy is Head of Product Management & Marketing at MarketVector IndexesTM.

 

Access the full paper: Economic Exposure Indexes: Investable Alternatives for Global World in Flux