Posted by: nbaground on: January 25, 2010
Of the world's 40000 publicly traded businesses, seventy seven percent are located on foreign soil, a pretty good sign that you can find compelling investment opportunities outside the United States.
Viewed another way, 51 percent of the world's $38 trillion total market cap belongs to the international arena. United States mutual funds hold $491 billion in offshore investments.
With a lot of potential investments outside the United States, investing internationally becomes a fantastic approach to diversify an equity portfolio. Some people contend that there is an increasing correlation in efficiency between the United States and international markets.
But even though world markets typically have a tendency to react similarly to news or developments taking place around the globe, over time, international and domestic markets often behave differently, helping to smooth out the ride in a diversified portfolio.
Take into account the performance of the Morgan Stanley Capital International in Europe, Australia and Far East Index, which maps the progress of stocks in developed markets located in Europe, Australia as well as the Far East, as opposed to the S&P 500, considered representative of the broader United States stock market.
When one is going strong, the other can lag behind, and that has been the case going back as far as 1970. Additionally, if the MSCI EAFE outperforms the S&P 500, it has done so by a more significant margin than when performances are reversed.
In fact, during the previous 10 years, the United States stock market has never been the leader in the global investment arena. Top performance has been the exclusive domain of foreign indices during that time, and the returns of the S&P 500 occasionally have lagged those of international peers by wide margins.
Global funds invest about half in the United States and fifty percent in the rest of the world, making them a smart way for somebody with little or no experience in international investing to test the waters. A great example is American Century Global Growth, whose skippers scour the world for the best growth investment options for the fund's investors.
You should look at the fund's investment objectives, risks, charges and expenses very carefully before you invest. Find out what their views are on going public with a company by searching: companies go public or company go public.
The fund's prospectus, which may be obtained by calling or visiting American Century's Site, contains this and other details about the fund and should be read thoroughly before investing.
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