Growing Global.It may not look like the best time to invest overseas. Think again. THESE DAYS, IT SEEMS THAT YOU NEED A STRONG constitution, a bottle of aspirin aspirin, acetyl derivative of salicylic acid (see salicylate) that is used to lower fever, relieve pain, reduce inflammation, and thin the blood. Common conditions treated with aspirin include headache, muscle and joint pain, and the inflammation caused by rheumatic and maybe even some hex-breaking abilities to invest overseas. Anywhere you look around the globe--whether across the Atlantic, the Pacific or in the Caribbean Basin--it seems some country is wrestling with economic woes. One day, Brazil devalues its currency. Twenty-four hours later, headlines say Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. will continue to be an economic no-man's-land. And, as for Russia, it still hasn't found its bearings. Things at home, though, have never seemed peachier. A bull market that knows no limits--economic growth moves onward on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. with no end in sight. Heck, a mere $1,000 investment in the stocks of the Standard & Poor's 500 five years ago would now be worth $2,939. So why even consider looking outside the good old U.S. of A.? Well, there are a number of answers to that question, some of which you've no doubt heard repeatedly. Let's start with some figures that should get your attention. First off, there's no better reason to look beyond American soil than the fact that other markets had their day in the sun, too. For proof, take March as a reference point and look back one year. The S&P 500 as a market gained 20% during the 52-week period. Not bad. Market stats make only part of the case for international investing. Remember that a lot of very good companies, corporations whose products we know, buy regularly and even love, are based outside our borders. You might drive a Volvo, own a Braun blender or listen to your favorite tunes on a Sony system. Well, it should be some comfort to know that some of the best stocks around are those of overseas firms that dominate markets and grow earnings with the best of corporate America. Take Nokia (NYSE NYSE See: New York Stock Exchange : NOK NOK In currencies, this is the abbreviation for the Norwegian Krone. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. .A). The Finnish maker of cellular phones, which surpassed Motorola a couple of years back, just happens to be the biggest name in its industry. Nokia shares are all the rave on Wall Street, and for good reason: over the three-year period that ended last December 31, Nokia shares soared 544%, a run that would have taken a $1,000 investment to $6,440. The S&P 500 during the same period rose a phenomenal 111%, but still couldn't match the little giant from Helsinki. Maybe you're a mutual fund die-hard. Then you'll be interested in knowing that according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Morningstar, the Chicago firm that tracks the mutual fund industry, there are six foreign funds that have beat out the 28.62% gain of the Vanguard 500 Index--the fund that tracks the U.S. market's benchmark, the S&P 500. That's not to say that the Vanguard fund hasn't had a simply fantastic run--it has. The point is that investing abroad doesn't have to be an act of mercy--it can be a profitable venture and one that's quite worthwhile. Indeed, while Asia may seem skittish skit·tish adj. 1. Moving quickly and lightly; lively. 2. Restlessly active or nervous; restive. 3. Undependably variable; mercurial or fickle. 4. Shy; bashful. , and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. is tied up with economic problems for now, there are some very exciting things happening in other parts of the globe. Take Europe, for instance. The continent on the other side of the Atlantic has been busy at work, with many nations there adopting a common currency this year. The result: European companies It may never be fully completed or, depending on its its nature, it may be that it can never be completed. However, new and revised entries in the list are always welcome. This is a list of companies from the countries in the European Union. are expanding into new markets chock-full of new opportunities. "The buzzword A term that refers to the latest technology or a term that sounds catchy. If not a flash in the pan, new technologies become mainstream. For example, Java was a hot buzzword in the 1990s, but should remain a major topic for decades. this year is convergence," says Wayne Weddington, chief executive of Pennoyer Capital Management in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . "This is a great time to be in some of the smaller European countries, which could reward investors handsomely in the upcoming year." The experts will tell you a little international flavor is good for your portfolio for a few other reasons. Start with diversification. We've all heard again and again how spreading your investments across different types of stocks, perhaps a few bonds and even holding some of your accumulated wealth in cash goes a long way toward protecting your savings. If one type of investment gets socked, chances are the others will be there to hold the fort or even counterbalance whatever is causing a problem. The same goes for international investments. There are bound to be times when the U.S. market will take a breather Verb 1. take a breather - take a short break from one's activities in order to relax catch one's breath, rest, breathe intermit, pause, break - cease an action temporarily; "We pause for station identification"; "let's break for lunch" . Think of overseas stocks or mutual funds as a way to cushion your portfolio from the ups and downs ups and downs pl.n. Alternating periods of good and bad fortune or spirits. ups and downs Noun, pl alternating periods of good and bad luck or high and low spirits of a volatile domestic market. JUST HOW MUCH? Before you carve up a chunk of your portfolio to be invested overseas, you might wonder just how much of your savings belong outside the U.S. Some experts recommend that your portfolio mirror the world. That's to say, since U.S. stocks make up 70%-75% of the overall worldwide investing pie, your portfolio should reflect that configuration. Others will tell you that by investing in U.S. companies, you gain quite a bit of exposure to the global economy. After all, they reason, U.S. firms market their goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. to the four corners of the Earth. For starters, though, we suggest you take the middle road. Perhaps start with 10% of your stock portfolio dedicated to overseas stocks and mutual funds. That way, you gain some new exposure to international economic growth without betting your entire portfolio on events away from home. Of course, like any other investment question, that 10% allotment needn't be hard and fast; if you feel that the global economy is prepared to take off, then up that amount perhaps to as much as 20%. WHAT TO INVEST IN? The thought of putting some of your assets to work overseas might sound a bit exotic. Still, when you get down to it, you'll find that the choices before you are quite similar to those you have when you invest here in the U.S. By now, you're probably familiar with mutual funds. When you invest in a fund, you own a slice of a portfolio of stocks and other investments that are monitored by a manager or team of investment experts. They keep on top of gains and losses and shuffle the portfolio when big changes occur or great opportunities arise. International funds come in two varieties. First, of course, there are what Morningstar labels foreign funds. These funds invest their assets exclusively overseas. Then, there are global or world stock funds, which allow portfolio managers the liberty of investing in the U.S. and abroad. That way, if you're a little unsure of developments abroad, you're assured that some of your assets remain close to home. Thanks to American depository receipts American Depository Receipt n. called in the banking trade an ADR, it is a receipt issued by American banks to Americans as a substitute for actual ownership of shares of foreign stocks. or shares (ADRs or ADSs), you can also put your money in individual companies even if their base and stock market happen to be thousands of miles away. That's because ADRs and ADSs act as vouchers representing blocks of stock an intermediary holds in a foreign stock market for you. Sounds a bit complicated? It isn't. For one, you can buy and sell ADRs or ADSs through a broker or online brokerage as you would any American stock. As an added convenience, ADRs and ADSs have stock prices listed in the daily papers along with other equities on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. or Nasdaq. 1999's PLAYING FIELD So, now that you have all the pieces in place, you might want to know where to look for the best overseas opportunities in 1999. Well, this year, all investment roads outside the U.S. seem to lead to Europe. This year, stock markets in the Old World have been sizzling siz·zle intr.v. siz·zled, siz·zling, siz·zles 1. To make the hissing sound characteristic of frying fat. 2. To seethe with anger or indignation. 3. . For one, the euro, a currency linking 11 of Europe's markets, will open markets to many of Europe's well-established names. There's another plus. Many nations, such as Italy, Portugal and Spain, have had to cut budget deficits and lower interest rates in order to meet the standards set by members of the European Economic Monetary Union that has overseen the euro's introduction. The result is a boom in many of Europe's smaller stock markets. Elsewhere? Experts say the rest of the world has some sorting out to do this year. Between depressed commodity prices and strife in the Congo, Africa hasn't exactly been an investor's bonanza Bonanza saga of the Cartwright family. [TV: Terrace, I, 111–112] See : Wild West , says Kunal Kapoor
Kunal Kapoor (Hindi:कुणाल कपूर, born 18 October 1975 in New Delhi, India) is an Indian actor. , fund analyst with Morningstar. "You'd have to be pretty daring to want to put a lot of money there," he adds. Meanwhile, Brazil's currency woes seem to have Latin America in their grip and could drag the region down this coming year. "We're pretty pessimistic pes·si·mism n. 1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view: "We have seen too much defeatism, too much pessimism, too much of a negative approach" about Brazil's currency devaluation Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. and its effect on its neighbors," says Marcus Smith, an analyst in the London office of MFS Investment Management MFS Investment Management, formerly Massachusetts Financial Services, is a Boston, Massachusetts-based financial services firm. In its publicity, MFS claims to have invented the mutual fund. The current chair of the company is Robert Pozen. , a mutual fund company. Parts of Asia, at long last, seem to be bottoming out, although the region as a whole is still something of a wild card. That's to say that while Korea's debt has recently been upgraded to investment grade, Japan continues to be mired mire n. 1. An area of wet, soggy, muddy ground; a bog. 2. Deep slimy soil or mud. 3. A disadvantageous or difficult condition or situation: the mire of poverty. v. in a decade-long recession, says Kapoor. Others see China on the brink of some problems, and that doesn't bode bode 1 v. bod·ed, bod·ing, bodes v.tr. 1. To be an omen of: heavy seas that boded trouble for small craft. 2. well for the region bouncing back. The prognosis? We'd say stick to funds to handle anything out of Europe. If you're bent on Adj. 1. bent on - fixed in your purpose; "bent on going to the theater"; "dead set against intervening"; "out to win every event" bent, dead set, out to owning individual stocks, though, Europe looks like the best bet, with some very solid companies that more than hold their own on the international stage. (See "Bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish on Europe," Moneywise, this issue.) CHOICES To dig up some solid international investment bets, we stopped at Morningstar's Website (www. morningstar, net). There we screened for both foreign and global funds. We looked for mutual funds with the best returns over the past three years. And we made sure that our picks handily hand·i·ly adv. 1. In an easy manner. 2. In a convenient manner. Adv. 1. handily - in a convenient manner; "the switch was conveniently located" conveniently 2. beat out the average annual 12.7% and 9.0% total returns for global and foreign stock funds, respectively, over the past three years. Finally, we chose funds with no-load fees, expenses that can reduce your return. To cap it off, we picked funds that require no more than a $3,000 minimum initial investment for regular accounts. (IRA Ira, in the Bible Ira (ī`rə), in the Bible. 1 Chief officer of David. 2, 3 Two of David's guard. IRA, abbreviation IRA. accounts will probably require you to pony up only a fraction of that amount, however.) Needless to say, with Asia in the dumps DUMPS a lethal inherited disorder of Holstein cattle that causes infertility. The name is an acronym of Deficiency of Uridine MonoPhosphate S and much of the world in a precarious spot this year, European funds headed our list, lead by Scudder Greater Europe Greater Europe is an increasingly popular term in the scholarly community for referring to the area of the Earth inhabited by ethnic Europeans, whether in Europe itself or in former European colonies. Growth Fund (ticker: SCGEX). The Scudder fund has posted an average annual total return of 24.77% over the past three years. Second and third places went to European funds as well: the Invesco European Fund (ticker: FEURX), which has boasted an average yearly total return of 23.12% the past three years, and the Vanguard European Stock Index (ticker: VEURX), with an average total return of 21.51% during the same period. The fourth place fund, Janus Worldwide (ticker: JAWWX), is a good choice if you're looking beyond Europe for opportunities in other corners of the globe, including the U.S., where the global fund is allowed to go fishing to complement its search overseas. The Janus fund's average annual total return is no slouch slouch v. slouched, slouch·ing, slouch·es v.intr. 1. To sit, stand, or walk with an awkward, drooping, excessively relaxed posture. 2. To droop or hang carelessly, as a hat. v. , either: 22.0%. Finally, we came up with two runners-up, the Artisan International Fund (ticker: ARTIX) a foreign fund which scouts everywhere outside the U.S. for picks and has averaged a 21.48% total return, and the Idex Global C Fund (ticker: IGLCX), which includes American holdings as well as foreign companies, and has had a 21.22% average annual total return over the past three years. STOCKING UP As we've said before, if you're looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. good core-holding quality stocks overseas, there are a few you might look at. MFS MFS Medicare fee schedule analyst Smith says European telecom stocks are a particularly good bet right now. For one, their exposure to events outside Europe, such as in Latin America and Asia, where things are a little rough right now, is very, very low. Meanwhile, the cellular phone market is blazing ahead. The growth of cell phone usage in Europe is currently twice that of the U.S. By 2001, one in two people in Europe will carry a cell phone. "The industry is technologically ahead of the U.S. in many respects," says Smith. "One for instance is the fact that in Europe, the party making a cellular call pays, not the person receiving the call, which helps increase calling volumes." Among Smith's favorites is Vodafone Airtouch (NYSE: VOD See video-on-demand. VoD - video on demand ), a company that has been making headlines of late. Originally Great Britain's cellular power, Vodafone recently reached across the Atlantic to snap up California-based Airtouch, making the company the largest cellular presence around. Smith looks for the company to grow earnings an average of 20%-25% a year over the next four years. Nokia, meanwhile, is another overseas way to play the wireless phone revolution, says Joseph Tigue, managing editor of S&P's The Outlook newsletter. Originally a paper products company, Finland's Nokia has taken to cellular phones with a vengeance, recently surpassing U.S.-based Motorola as the largest producer of mobile phones. Tigue says Nokia's earnings should rise 25% in 1999. BUCK UP In all, we've gathered 11 international investments that stand a good chance of prospering in the years ahead. We advise you to approach overseas investing with the same patience and long-term outlook you would in putting assets to work in the U.S. That way, by riding out the ups and downs, you stand to gain whether you invest at home or abroad.
Investing Around The World
3-year Avg.
Annual 1-Year
Fund (Ticker) Type Total Return(*) Total Return(*)
Scudder Greater Foreign 24.77% 9.52%
Europe Growth
(SCGEX)
Invesco European Foreign 23.12 12.49
(FEURX)
Vanguard European Foreign 21.51 9.10
Stock Index
(VEURX)
Janus Worldwide Global 22.00 15.30
(JAWWX)
Artisan International Foreign 21.48 26.08
(ARTIX)
Idex Global C Global 21.22 13.33
(IGLCX)
Minimum Initial Telephone
Fund (Ticker) Investment (IRA) Number
Scudder Greater $2,500 ($1,000) 800-225-2470
Europe Growth
(SCGEX)
Invesco European 1,000 (250) 800-525-8085
(FEURX)
Vanguard European 3,000 (1,000) 800-662-7447
Stock Index
(VEURX)
Janus Worldwide 2,500 (500) 800-525-8983
(JAWWX)
Artisan International 1,000 (250) 800-344-1770
(ARTIX)
Idex Global C 500 800-233-4339
(IGLCX)
(*) As of 3/1/99 Source: Morningstar Inc. (www.morningstar.net) Picks Of The World Seeking to grow your global portfolio? The equities below are expected to grow as Europe continues its economic expansion.
52-Week Current
Company Industry High / Low Price(*)
Roche Holdings Pharmaceuticals $133.00/$91.50 $127.00
(OTC: ROHHY)
Vodafone Group Cellular phone 197.75/84.06 176.56
(NYSE: VOD) service
Nokia Cellular phone 155.38/46.72 137.13
(NYSE: NOK.A) equipment
Novartis Pharmaceuticals 107.00/71.00 85.75
(OTC: NVTSY)
Mannesmann Industrial 150.00/61.50 128.50
(OTC: MNNSY) manufacturing
(*) As of 3/3/99 |
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