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International Trading: Why This Idea Is Practical
Of the globe's 40000 publicly traded firms, seventy seven percent are situated on foreign soil, a pretty good sign that there are actually compelling investment opportunities outside the United States.
Viewed a different way, 51 percent of the world's $38 trillion total market capitalization belongs to the global arena. United States mutual funds hold $491 billion in international investments.
With a lot of potential investments outside the United States, investing internationally becomes an incredible approach to diversify an equity portfolio. Many people contend that there is an increasing correlation in performance among the United States and international markets.
But even though world markets typically have a tendency to react similarly to news reports or developments taking place around the world, over time, international and domestic markets tend to behave differently, helping to smooth out the ride within a diversified portfolio.
Take into account the performance of the Morgan Stanley Capital International Europe, Australia and Far East Index, which maps the progress of stocks in developed markets located in Europe, Australia along with the Far East, as opposed to the S&P 500, considered representative of the broader Unites States stock market.
When one is going strong, the other tends to lag behind, and that has been the situation 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 past 10 years, the United States stock market has never ever been the leader in the global investment arena. Top performance has been the exclusive domain of international indices in 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 50 percent in the rest of the world, making them a smart way for somebody with little or no experience in overseas investing to test the waters. A great example is American Century Global Growth, whose managers scour the entire world for the best growth investment options for the fund's shareholders.
You should look at the fund's investment objectives, risks, fees and expenses very carefully before you invest. Discover what their views are on going public with a company by searching: companies go public or company go public.
The fund's prospectus, which can be obtained by contacting or visiting American Century's Site, contains this and other information regarding the fund and should be read thoroughly before investing.
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