High U.S. interest rates generally impact emerging markets negatively. Their debts, often in U.S. dollars, become more costly, and investors seeking higher returns in the U.S. withdraw their funds. This creates tighter financial conditions. According to IMF's Kristalina Georgieva, this issue is more significant for emerging markets while Europe may face less impact from the difference in monetary policies.
Small-cap stocks, representing companies with smaller market values, often offer higher growth prospects but also increased risk. Diversifying through ETFs that track small-cap companies is recommended to reduce risk. Here are four recommended ETFs: Schwab US Small-Cap, iShares MSCI Emerging Market Small-Cap, Pacer US Small Cap Cash Cows 100, and Vanguard Small-Cap Value Index Fund. The appropriate allocation depends on individual risk tolerance and investment goals.
Global dividend payouts reached a record $1.66 trillion in 2023, driven by high interest rates boosting bank margins. Despite this, large dividend cuts from companies like BHP and Intel slightly dampened overall growth. Nevertheless, around 86% of companies either increased or maintained their dividends, with Europe contributing greatly to the overall rise. In 2024, dividend payouts are expected to continue growing, reaching an estimated $1.72 trillion.
