BRECX
BlackRock International Dividend-InvC
Global Dividend Strategy for Income Seekers
The BlackRock International Dividend-InvC (BRECX) is designed to provide investors with a combination of long-term total return and current income by investing in dividend-paying equity securities issued by foreign companies. This fund is particularly appealing to those seeking exposure to international markets while benefiting from dividend income. With a yield of 1.55%, BRECX offers a steady income stream, making it an attractive option for income-focused investors. The fund’s strategy of investing in companies across various market capitalizations allows for diversification, which can help mitigate risks associated with investing in foreign equities.
At A Glance
Executive Summary
BRECX offers global dividend exposure with a 1.55% yield and a focus on large-cap foreign equities, though it has a higher expense ratio.
Global exposure to dividend-paying stocks Focus on large-cap foreign equities Potential for long-term total return
Higher expense ratio compared to peers Negative alpha and Sharpe ratio Recent underperformance against benchmark
Performance Analysis: A Mixed Bag
BRECX has shown a mixed performance over various time frames. Over the past year, the fund has delivered an annualized return of 11.79%, which is commendable but still lags behind its benchmark, the MSCI ACWI xUS DivAdj Index, which returned 17.25% over the same period. The fund’s five-year annualized return stands at 5.84%, while its inception return is 8.49%. Despite these figures, the fund’s Sharpe ratio of -0.45 and alpha of -5.48% indicate that it has not been able to generate returns commensurate with the risks taken. This underperformance relative to its benchmark and peers suggests that potential investors should carefully consider the fund’s risk-return profile.
Portfolio Composition: A Focus on Large-Cap Equities
The portfolio of BRECX is heavily weighted towards large-cap equities, with 61.93% of its assets allocated to extra-large market cap companies. This focus on large-cap stocks provides stability and potential for steady growth, as these companies are typically well-established and financially sound. The fund’s top holdings include industry giants like Taiwan Semiconductor Manufacturing Co Ltd and Novo Nordisk AS, which are leaders in their respective sectors. The sector allocation is diverse, with significant investments in technology (20.63%), industrials (20.32%), and financials (15.33%), providing a balanced exposure to various economic sectors.
Risk Metrics: Navigating Volatility
Investors should be aware of the risk metrics associated with BRECX. The fund has a beta of 1.02, indicating that it is slightly more volatile than the market. Its standard deviation of 3.51% suggests moderate volatility, while the downside risk (UI) of 2.60 highlights potential losses during market downturns. The fund’s correlation with its benchmark is high at 94.93%, meaning its performance closely follows the benchmark’s movements. However, the negative Treynor ratio of -5.35 and the max drawdown of -8.9% indicate that the fund has faced challenges in managing risk effectively, which could be a concern for risk-averse investors.
Comparative Analysis: Expense Ratio and Peer Performance
When comparing BRECX to similar funds, its expense ratio of 1.66% stands out as relatively high. This is a significant consideration for investors, as higher fees can erode returns over time. In contrast, similar funds like Mundoval (MUNDX) and BNY Mellon Worldwide Growth-A (PGROX) have lower expense ratios of 0.0151 and 0.0113, respectively. Additionally, these funds have outperformed BRECX over the past year, with returns of 18.11% and 17.73%. This comparative analysis suggests that while BRECX offers unique exposure to international dividends, investors should weigh the cost against potential returns.
Sector Allocation: Technology and Industrials Lead
BRECX’s sector allocation reveals a strong emphasis on technology and industrials, which together account for over 40% of the fund’s portfolio. This strategic allocation reflects a focus on sectors with robust growth potential and global relevance. The technology sector, in particular, is represented by top holdings such as Taiwan Semiconductor Manufacturing Co Ltd and ASML Holding NV, which are pivotal players in the semiconductor industry. The industrials sector includes companies like Air Liquide SA, which are leaders in their fields. This sectoral focus positions BRECX to capitalize on technological advancements and industrial growth, offering investors exposure to dynamic and evolving industries.
Market Cap Allocation: Emphasis on Stability
The market cap allocation of BRECX is predominantly skewed towards extra-large and large-cap companies, which together constitute nearly 88% of the portfolio. This allocation strategy underscores the fund’s emphasis on stability and reduced volatility, as large-cap companies are generally more resilient to market fluctuations. The presence of well-established companies like Lvmh Moet Hennessy Louis Vuitton SE and AstraZeneca PLC in the portfolio further reinforces this stability. By focusing on large-cap equities, BRECX aims to provide investors with a reliable investment option that balances growth potential with risk management.
Conclusion: Is BRECX Right for You?
In conclusion, BRECX offers a unique opportunity for investors seeking international exposure to dividend-paying stocks. Its focus on large-cap equities and diverse sector allocation provides a balanced approach to investing in foreign markets. However, the fund’s higher expense ratio and recent underperformance relative to its benchmark and peers are important considerations. BRECX may be well-suited for investors who prioritize income and are willing to accept the associated risks for potential long-term returns. As always, potential investors should assess their risk tolerance and investment goals before committing to this fund.
Similar Securities
TEMFX: Templeton Foreign-A | Global Value Investment
TEMFX offers diversified foreign equity exposure with a focus on value. It stands out with a 2.44% yield and a strategic allocation in financials and cyclicals.
PEQUX: Putnam Focused International Equity-A | Global Growth Opportunities
PEQUX offers global stock exposure with a focus on growth, featuring a diverse portfolio and a 1.16% expense ratio.
TROSX: TRPrice Overseas Stock-Inv | Global Growth Opportunities
TROSX offers exposure to non-U.S. large-cap stocks with a 2.20% yield and competitive 0.78% expense ratio, ideal for growth-focused investors.
MEURX: Franklin Mutual European-Z | European Value Investment
MEURX offers European value exposure with a 0.95% expense ratio and 2.48% yield, focusing on capital appreciation and income.
DODFX: Dodge & Cox International Stock-I | Diversified Foreign Equity Investment
DODFX offers diversified foreign equity exposure with a competitive 0.62% expense ratio, focusing on value stocks across multiple countries.
Futher Reading
https://www.morningstar.com/funds/xnas/BRECX/quote
https://finance.yahoo.com/quote/BRECX/”>Yahoo: BlackRock International Dividend-InvC
https://ftcloud.fasttrack.net/web/chart/BRECX
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