Leading internationally-focused ASX-listed exchange-traded funds (ETFs) have gone on a strong run in recent months. In 2024 alone, the iShares S&P 500 ETF (ASX: IVV) unit price has risen 16%.
Fearful investors may be wondering if they've missed out. We don't know for sure what's going to happen next; my crystal ball isn't working at the moment.
But, it may create envy to see ASX ETFs like iShares Global 100 ETF (ASX: IOO) and Vanguard MSCI Index International Shares ETF (ASX: VGS) reaching new highs.
Have we missed out on all the gains? Not necessarily…
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Profit growth drives share prices
As the chart below shows, the IVV ETF, the IOO ETF and the VGS ETF have all delivered strong long-term gains for investors.
This has been driven by the performance of the underlying holdings – capital growth of an ETF's investments drives the net asset value (NAV) of the ASX ETF.
Global powerhouses like Nvidia, Alphabet, Microsoft, Amazon and Apple have all seen their share prices climb in recent months, helping the international ASX ETFs rise.
It's true that these funds are at, or close to, all-time highs. But they have reached all-time prices many times over the years – it would have been a mistake to avoid investing at those other times.
Business profits at Nvidia, Microsoft, and others keep rising, increasing their underlying value. Yes, interest rates are still high, but those US giants are delivering earnings growth to justify higher share prices, even if the price/earnings (P/E) ratio doesn't change.
Should we invest?
For investors who regularly plan to buy one (or more) of these international ETFs, I suggest they stick with their plan and continue buying on schedule. Share markets can be high sometimes and dip sometimes. Dollar-cost averaging will hit those different peaks and troughs.
As for investors that prefer to be selective about price with their investment decisions, the above chart doesn't say 'great value' at the moment. However, I believe the long-term has shown the share market can climb over a 'wall of worry', such as wars, pandemics, economic downturns and so on.
I believe the IVV ETF, IOO ETF, and VGS ETF could all be materially higher in five years than they are today, with those strong underlying businesses driving ongoing success.
I'd be happy enough to buy some units today for the long term of any of the international ASX ETFs I've mentioned, but if I won the lottery, I wouldn't invest it all in one go – I'd tactically want to spread out the investing over the next year or two.
