We have been advocating Freedom Investing since 2004. Every year, The Heritage Foundation evaluates all the world’s countries using their Index of Economic Freedom, where a high score correlates to nearly every positive measure of a country. We then use this ranking and efficient frontier analysis to craft our Foreign Stock investment strategy that we call “Freedom Investing.”

This article is part of my series where I review how Freedom Investing performs for the quarter. In this analysis, I have used the actual products we are investing in rebalanced monthly to our static asset allocation targets with returns ending December 31, 2022. This analysis does not reflect our dynamic tilt or our individual stock foreign health care strategy, both of which we implement in client portfolios.

For benchmarks, I have used actual products as comparison. The EAFE (EFA) should be compared to Developed Freedom Investing, Emerging Market (VWO) should be compared to Emerging Market Freedom Investing, and the All World ex-US (ACWX) should be compared to the Overall Freedom Investing.

In March 2022, our Investment Committee updated our Freedom Investing strategy for the new 2022 Index of Economic Freedom. For the purposes of this model, those changes are assumed to have been implemented during the March 1, 2022 rebalancing. You can read about those changes in “An Overview of Our Allocation Changes (March 2022).”

Last quarter, we saw that in 1-year returns ending September 30, 2022, Developed Freedom Investing had a -0.44% disadvantage, Emerging Market Freedom Investing had a -0.34% disadvantage, and Overall Freedom Investing had a +0.14% advantage.

This quarter, we saw that in 1-year returns ending December 31, 2022, Developed Freedom Investing had a +0.13% advantage, Emerging Market Freedom Investing had a +0.45% advantage, and Overall Freedom Investing had a +0.77% advantage.

	Ticker	3-Month	6-Month	9-Month	1-Year
iShares MSCI EAFE ETF (Market Return)	EFA	17.66%	5.46%	-8.44%	-14.35%
Developed Freedom Investing		18.91%	7.08%	-8.87%	-14.22%
Australia	FLAU	15.44%	7.52%	-11.04%	-5.52%
Austria	EWO	25.10%	7.46%	-8.00%	-21.92%
Canada	FLCA	7.97%	-0.68%	-16.37%	-11.91%
Denmark	EDEN	30.58%	12.43%	-2.34%	-11.44%
Finland	EFNL	20.84%	8.75%	-3.14%	-17.18%
Hong Kong	FLHK	15.08%	-3.84%	-4.98%	-9.37%
Ireland	EIRL	23.46%	13.82%	-3.13%	-18.82%
Netherlands	EWN	22.58%	6.88%	-10.32%	-24.41%
New Zealand	ENZL	18.47%	9.70%	-10.27%	-16.17%
Norway	ENOR	19.50%	0.04%	-16.44%	-12.55%
Singapore	EWS	11.11%	7.53%	-7.41%	-9.79%
Sweden	EWD	19.32%	6.78%	-13.88%	-27.79%
Switzerland	FLSW	11.65%	1.48%	-12.09%	-18.13%
United Kingdom	FLGB	19.40%	4.83%	-5.61%	-5.95%
	Ticker	3-Month	6-Month	9-Month	1-Year
Emerging Markets Freedom Investing		10.40%	-2.53%	-13.59%	-17.54%
Emerging Markets	VWO	8.56%	-3.60%	-12.33%	-17.99%
Taiwan	FLTW	10.66%	-5.25%	-21.81%	-27.50%
Korea, South	FLKR	20.39%	-2.54%	-20.72%	-27.52%
Chile	ECH	15.78%	15.44%	-0.58%	25.17%
	Ticker	3-Month	6-Month	9-Month	1-Year
Overall Freedom Investing		15.73%	3.51%	-10.52%	-15.28%
iShares MSCI ACWI ex US ETF (Market Return)	ACWX	14.65%	1.94%	-10.69%	-16.04%

 

For more information about Freedom Investing, you may enjoy reading “A 25-Year Review of Freedom Investing” or “Risk-Return Analysis of Freedom Investing.”

Photo of Denmark by K B on Unsplash. Returns data gathered from Morningstar Advisor Workstation.