How To Invest Your Money In The Second Half Of 2015

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The first half of 2015 is practically in the rearview mirror.

• SPDR Dow Jones Industrial Average ETF (DIA) added 1.8% year to date, through June 26.
• SPDR S&P 500 ETF (SPY) returned 3%.
• The tech-heavy PowerShares QQQ ETF (QQQ) jumped 6%.
• iShares MSCI EAFE ETF (EFA), tracking foreign-developed markets, rallied nearly 10%.
• iShares MSCI Emerging Markets ETF (EEM) picked up 2.4%.

How should you invest your money in the second half of the year? I asked a panel of six financial advisors to share their read on the stock market and best investment recommendations.

1. Buy an International Growth Fund
by Shannon Saccocia

International developed market equities caught fire at the start of the year, outperforming U.S. stocks significantly. Investors expect the same positive results from quantitative easing in Europe and Japan, as we have enjoyed here over the past several years. While clearly stocks have experienced gains, I think the momentum should continue. Tailwinds persist and forward price-to-earnings ratios are relatively attractive for the MSCI EAFE Index (a benchmark for foreign-developed markets) at 16 versus the S&P 500 Index at nearly 18.

One way investors have been playing this trade has been through currency hedged ETFs, with the U.S. dollar up over 19% versus a broad basket of currencies in the last year. This has certainly padded returns for these investors versus those in unhedged vehicles. However, I believe it is unlikely that the U.S. dollar will continue to appreciate at such a pace. And, in fact, we’ve seen a bit of weakness over the past several weeks as the global economic outlook has improved.

Asian shares rose Wednesday, June 24, 2015. Japan’s benchmark hit an 18-year high on hopes of a bailout deal between Greece and its creditors. (AP Photo/Shuji Kajiyama)

Also, with the Federal Reserve likely raising rates to close out the year, volatility is likely to tick higher, making more passive exposures – hedged or unhedged – less desirable. Active managers focused on identifying global leaders can benefit from better export competitiveness.  I would prefer actively-managed equity exposure over a passive vehicle. Getting this exposure via a currency-hedged vehicle is less important in such an environment than finding a team who can choose the right companies.

– Shannon Saccocia is managing director of Boston Private Wealth with $9 billion under management in Boston.