MoneyWatch

Athena financial & insurance services, inc.

Registered Investment Advisors
Text Box: If you are like many investors, you probably have far too little of your portfolio invested in international stocks. This is true even though investors have learned how important it is to diversify across investment styles, sectors and market capitalization. You may have good reason for keeping money close to home, or maybe you’re just narrow-minded. Either way, you’re missing out. Consider for the moment the following. There’s a good chance you’ll wake up this morning to the sound of a SONY clock radio. You’ll hop out of bed (which you bought at IKEA) and brush your teeth with AQUAFRESH. Then you’ll put on your ADDIDAS sweat suit and head out for your morning jog. You’ll come back home, shower with DOVE soap, take two ALEVES for your sore knees, have a SLIM FAST for breakfast and pop a ONE-A-DAY VITAMIN. As you drive to work in your LEXUS, you’ll call your secretary on your SAMSUNG cell phone and ask her to fax something to a client using the office’s new KONICA-MINOLTA copier. This afternoon, you’ll sneak away for a round of golf using your TAYLORMADE clubs and MAXIFLI REVOLUTION golf balls. On the way back you'll stop at a SHELL STATION to fill-up your car and check the air in your MICHELIN tires and while you’re waiting you’ll buy a SNAPPLE LEMON TEA to drink. After you get home you’ll flip on your MITSUBISHI plasma television to catch up on the day’s news and might even treat yourself to a couple of scoops of BEN AND JERRY’S ice cream. What do all these products or services have in common? They are all owned by companies located outside of the United States. While the U.S. is certainly home to some of the most successful companies in the world, through foreign investments you can gain exposure to various world economies, business cycles, currencies and global product leaders. There are different ways you can invest internationally: through mutual funds, American Depository Receipts, Exchange Traded Funds or direct investments in foreign markets. For today we’ll focus on the easiest way to go global: mutual funds. As always, you need to consider your tolerance for risk when selecting a mix of international mutual fund investments. Core funds primarily invest in developed markets throughout the world, while targeted funds invest in emerging markets or specific countries or regions. The narrower focus of targeted funds makes them higher risk than core funds. International bond funds offer another investment type. These funds primarily invest in government or corporate debt securities outside the United States. Core international funds will typically invest in developed foreign markets such as Europe, Australia or Japan and generally hold a variety of stocks from many countries, rather than investing in a particular region or country. These funds may be less volatile than emerging market or single country funds because they’re more diversified. Emerging market funds target developing countries such as China, Russia, South Korea and Mexico. Many emerging market countries have economies that are in transition from government control to a free market, or from agricultural to industrial. These funds can help you pursue the high growth potential such markets can offer but tend to be very volatile. A regional or single country fund invests in single region or countries such as Europe, Latin America or Japan. Investing in a regional fund provides a way to focus your investment on political or economic conditions that you think are favorable. When you analyze international investments, you should remember their special risks and that investing in emerging markets may accentuate these risks. Unstable political climates, currency fluctuations and economic shifts can have a dramatic impact on performance.▲

Diversifying your portfolio...

Volume 18, Issue 2

January 22, 2007

Investing Globally