[dropcap]Q:[/dropcap]What is the best way to diversify my portfolio to gain exposure to international stocks?
[dropcap]A:[/dropcap] There are many different strategies that will accomplish your goal. Your interest in international investing is a very important part of building a balanced investment plan. For example there are more consumers in Asia than in North America, Europe, Latin America, and Africa COMBINED! Additionally, it is projected that over 80 percent of all new growth will come from Asia. So how do you position yourself to take advantage of those opportunities?
First, you could buy the stocks of foreign companies. For example, the components of an iPhone are sourced from several countries: processor (Samsung – South Korea), transceiver (Infineon – Germany), touchscreen (TPK – Taiwan), compass (AKM – Japan), and the accelerometer (STM – Switzerland), etc., and assembled in China. You could purchase shares of any of those companies.
You could purchase shares of mutual funds that invest in those stocks, which may provide for more diversification within your portfolio.
Second, and perhaps less daunting, is the strategy of purchasing stock in U.S. companies whose sales are primarily in international markets. For example, Coca Cola – 69 percent out of the US, Nike – 64 percent, Apple – 65 percent, Heinz – 56 percent, 3M – 65 percent and Avon 79 percent, etc… The majority of the profits of these “American” companies are produced in other countries. Owning any of these or other similar stocks can position you to take advantage of the international opportunities without owning “foreign stocks.” Of course, as with any investment, an investor should consider all of the risks involved.
The world of investing is changing rapidly. If your investment program is not up to date, you may miss new opportunities. A portfolio check up with a competent financial advisor can assist you in deciding what would be best suited for you and your portfolio.
BY: Bill and Cindi Porter
Aileron Investment Advisors
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