What is OAIM? (Pros, Cons, and Strategies)

For investors looking to diversify their portfolio with international exposure, OAIM (OneAscent International Equity ETF) can be a compelling option. OAIM provides an avenue to invest in a diversified portfolio of international equity securities, emphasizing companies upholding ethical standards in their operations. Today, we'll delve into what OAIM is, along with its advantages and disadvantages, and explore strategies for investing in OAIM effectively.

What is OAIM?

OAIM stands for OneAscent International Equity ETF. OAIM seeks to track the performance of the OneAscent International Equity Index, which focuses on companies outside of the United States that meet specific environmental, social, and governance (ESG) criteria.

The ETF aims to invest in international companies that align with certain ethical and moral standards, ensuring that investors can grow their wealth responsibly. This strategy has been particularly appealing to those looking to balance financial returns with a commitment to social responsibility.

Key Features of OAIM

• ESG Criteria: Companies are selected based on their compliance with environmental, social, and governance practices.
• Geographical Diversification: Invests in companies outside of the U.S., offering exposure to various global markets.
• Market Capitalization: Companies with sufficient market cap and liquidity, ensuring a stable investment portfolio.

By selecting stocks that meet rigorous ESG standards, OAIM aims to provide a blend of ethical investing and international diversification.

OAIM Composition

OAIM includes well-known international firms from various sectors such as technology, healthcare, consumer goods, and finance. Examples include companies like Nestlé (Switzerland), Toyota (Japan), and HSBC (UK). This diversified approach reduces the risk associated with investing in a single market or sector by spreading investments across different regions and industries.

Pros of OAIM

Ethical Investing

OAIM appeals to investors who want to ensure their money is invested in companies adhering to high ethical standards. This ESG focus means that the fund excludes companies involved in harmful practices, such as environmental degradation, poor labor practices, or unethical governance.

International Exposure

By investing in OAIM, you gain exposure to international markets, which can diversify your portfolio away from U.S.-centric investments. This geographical diversification can reduce risk and provide growth opportunities in emerging markets.

Quality and Stability

Companies that meet stringent ESG criteria often exhibit robust governance and sustainable business practices, which can lead to stability and long-term growth. Investing in such companies can be particularly beneficial over the long term as they are generally more resilient to market volatilities.

Cons of OAIM

Limited High-Yield Opportunities

Because OAIM focuses heavily on ESG criteria, it may exclude some high-yielding companies that do not meet these standards. This might result in lower dividend yields compared to ETFs that do not have ethical investing mandates.

Currency Risk

Investing in international equities exposes investors to currency risk. Fluctuations in currency exchange rates can impact the returns of the ETF. While this can sometimes work in favor of the investor, it can also lead to losses.

Higher Expense Ratio

Ethical screening and international diversification can come with higher management costs. OAIM may have a higher expense ratio compared to domestic ETFs, impacting the net returns, especially over the long term.

OAIM Investment Strategies

OAIM offers a balance of ethical investing and international diversification, making it suitable for various investment strategies. Below we discuss some investment approaches that can help you maximize the benefits of investing in OAIM.

Long-term Ethical Investment Strategy

OAIM is an excellent choice for investors committed to ethical investing for the long haul. Its emphasis on ESG criteria means that as industries transition to more sustainable practices, companies within OAIM are likely to benefit. Long-term investing in OAIM aligns with a vision of responsible growth and can be particularly appealing to those who value sustainability alongside financial returns.

Geographical Diversification Strategy

For investors looking to diversify their portfolio geographically, OAIM provides substantial exposure to international markets. By incorporating OAIM into your investment mix, you can reduce the risk associated with U.S. market volatility and capture growth in different economic regions. This strategy works well when combined with other domestic ETFs to achieve a balanced global portfolio.

ESG Focused Reinvestment

Reinvesting dividends and capital gains from OAIM back into the ETF can harness the power of compounding. This approach, combined with the ethical investments intrinsic to OAIM, can result in a robust portfolio growth over time while staying aligned with personal values.

Conclusion

OAIM (OneAscent International Equity ETF) stands out as a compelling option for investors looking to combine ethical investing with international diversification. By focusing on companies that meet specific ESG criteria, OAIM not only provides a pathway for responsible investing but also diversifies exposure across various global markets. While the trade-offs include potential currency risks and a higher expense ratio, the long-term benefits of investing in high-quality, ethically sound companies can outweigh these downsides. By strategically integrating OAIM into a well-rounded investment portfolio, investors can achieve both financial and ethical goals.