International Investments: Why This Method Is Sensible
Of the world's 40000 publicly traded corporations, seventy seven percent are situated overseas, a pretty good sign that you will find compelling investment opportunities beyond the United States.
Viewed a different way, fifty one percent of the world's $38 trillion total market cap belongs to the foreign arena. United States mutual funds hold $491 billion in international investments.
With so many potential investments outside the United States, investing internationally becomes an excellent technique to diversify an equity portfolio. Many people contend that there's an increasing correlation in efficiency among the United States and international markets.
But even though world markets typically tend to react similarly to news or developments transpiring around the world, with time, international and domestic markets often 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 charts the progress of stocks in developed markets located in Europe, Australia and the Far East, compared to the S&P 500, considered representative of the broader Unites States stock market.
When one may be going strong, the other will probably lag behind, and that has been the scenario going back as far as 1970. Furthermore, if the MSCI EAFE outperforms the S&P 500, it has done so by a larger margin than when performances are reversed.
In fact, during the last decade, the United States stock market has never ever been the leader in the global investment industry. Top performance has been the exclusive domain of foreign indices in that time, and the returns of the S&P 500 occasionally have lagged those of overseas peers by wide margins.
Global funds invest about half in the United States and half in the rest of the world, making them a smart way for a person with little or no experience in overseas investing to test the waters. A very good example is American Century Global Growth, whose skippers scour the globe for the best growth investment prospects for the fund's shareholders.
You should consider the fund's investment objectives, risks, extra charges and expenses thoroughly before you invest. Discover what their views are on going public with a company by exploring: companies go public or company go public.
The fund's prospectus, which may be obtained by contacting or visiting American Century's Website, contains this and other information regarding the fund and should be read very carefully before investing.
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