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Vontobel Portfolio Manager Interview: 2020 International Equity Outlook

Accent_David Souccar Vontobel

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Cheap liquidity combined with improved investor sentiment buoyed international markets in 2019. Nevertheless, long-term structural headline risks remain, such as the nature of the United States’ future relationship with China and the prospect of difficult trade talks between the U.K. and the European Union. Investors should concentrate on quality companies to help navigate long-term uncertainty.

Combining stocks in defensive growth sectors, such as consumer staples, with stocks in faster growth sectors like technology can help investors outperform over the cycle, capturing as much upside as possible while aiming to protect on the downside.

It is not a given that U.S. markets will continue to outperform international markets as they have over the last decade. International valuations are currently more attractive and could ultimately converge with the U.S. In addition, international exposure gives investors access to diversification, different business models, and potentially better companies in areas such as consumer staples. While progress on corporate governance is being made in Japan, investors should remain unconvinced by valuations.

Virtus Vontobel Foreign Opportunities Fund Top Ten Holdings (%), as of 9/30/19: Nestle SA (4.24), Alimentation Couche-Tard Inc. (3.80), Unilever NV (3.70), Anheuser-Busch InBev SA/NV (3.56), Safran SA (3.35), HDFC Bank Ltd (3.33), Mastercard Inc. (3.31), Relx PLC (3.09), Tata Consultancy Services Ltd (2.97), Wolters Kluwer NV (2.97)

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Equity Securities: The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small or medium-sized companies may enhance that risk. Foreign & Emerging Markets: Investing internationally, especially in emerging markets, involves additional risks such as currency, political, accounting, economic, and market risk. Prospectus: For additional information on risks, please see the fund’s prospectus.