Invesco International Corporate Bond ETF

PICB

Market cap $199M

The weak dollar, a scenario that could soon be extended with the help of interest rate cuts by the Federal Reserve, is lifting a plethora of asset classes. This includes commodities and international equities.

With talk of rate cuts getting more audible, they almost seem inevitable. Indeed, the CME FedWatch is forecasting an almost 90% chance of cuts.

Invesco International Corporate Bond ETF is designed as a hedge or diversification tool for US dollar-based investors, offering exposure to non-USD investment-grade bonds. The fund's primary risk and return driver is the US dollar's value vs. G10 currencies, not just bond yields or credit risk. PICB has underperformed over the past decade, but its purpose is to protect against USD weakness, not to outperform in all conditions.

Global equities ex-US are the leaders, along with a broad measure of commodities, based on a set of ETFs through Friday's close. Vanguard FTSE Developed Markets ETF has rallied 7.2% so far this year.

Exclude China and broadly defined EM stocks are posting substantially softer results, based on a set of ETFs through Friday's close. US shares are effectively neck and next with EM so far in 2024.

One lesson to be taken away from August's stock market volatility is why diversification is so important. For now, the market does seem to be in good shape following Wednesday's as-expected CPI results.