iQ International Efficiency Model

INVESTMENT OBJECTIVE

The iQ International Efficiency Model chooses stocks of large-cap companies with foreign headquarters in order to pursue long-term capital appreciation. The Model aims to expose investors to reputable, large-cap companies that conduct business overseas. The investment strategy typically concentrates on picking businesses that have a high relative cash flow and the potential for long-term growth.

INVESTMENT PROCESS

The iQ International Efficiency Model selects its holdings based on the following rules-based investment process:

  • Starting Universe = The largest (by Market Capitalization) 100 domestically-traded stocks not domiciled in North America.

  • Sort the 100 socks by cash flow return on invested capital* and select the top twenty on an equal-weight basis.

This model reconstitutes the first trading day of each February.

Why invest internationally?

Investing in international stocks can offer several potential benefits for investors. Here are some reasons why investors might choose to invest in international stocks:

1. Diversification: Investing in international stocks can provide diversification benefits by adding exposure to companies outside of the investor's home country. This can help to reduce portfolio risk and potentially enhance returns by tapping into the growth potential of companies in different regions.

2. Growth Potential: International stocks can offer growth opportunities that may not be available in the investor's home country. For example, some emerging market countries may be experiencing faster economic growth rates than more developed countries, which could provide potential growth opportunities for companies in those regions.

3. Access to Different Sectors: Investing in international stocks can provide exposure to different sectors that may not be well-represented in the investor's home country. For example, some international companies may be leaders in sectors such as healthcare, technology, or consumer goods, which could offer potential growth opportunities.

4. Currency Diversification: Investing in international stocks can provide exposure to different currencies, which can offer currency diversification benefits. This can be especially important for investors who are concerned about the potential impact of currency fluctuations on their investments.

5. Opportunity for Risk Management: Investing in international stocks can also offer potential opportunities for risk management by diversifying across countries and regions, as well as potentially benefiting from different economic and market cycles.

However, it's important to note that investing in international stocks can also come with risks, such as political instability, currency fluctuations, and economic uncertainty.