401k Plans » Etfs To Infiltrate More Portfolios

In recent years, investors from North America have taken serious interest in investing in international markets. With a lot of the foreign markets outperforming the US markets and the US dollar having fallen dramatically against a lot of major currencies. It is of no surprise that US investors are looking elsewhere for diversification.

As an average investor or trader, it is very hard to invest in different foreign markets using individual stocks. Your brokerage firm may not provide foreign market trading, some countries may even forbid foreigners from investing into their stocks or it could be extremely expensive way to invest.

As market tools become more and more sophisticated, there is now a very simple and straightforward way to add a foreign touch to your portfolio. Investors can now use ETFs (Exchange Traded Funds) to gain assess to a lot of foreign markets. ETFs are index funds that trade just stocks on major stock market exchanges namely NYSE (New York Stock Exchange). Most of the ETFs do not impose high expenses. As they trade like stocks, they offer great flexibility.

ETFs use the concept of a basket of stocks or stock indices. Hence, you have instant diversification hopefully not diworsification. It is always important to analyze what you are buying and see if the specifications of the underlying ETF match your trading or investment criteria.

Going into foreign markets using international ETFs: you have ample choices as the ETF industry continues to expand.

The main two categories:

1) the broad based international ETFs such as European ETFs or Far East ETFs. 2) the country specific ETFs such as China, Japan, Sweden, United Kingdom.

Broad based international ETFs vs country-specific ETFs:

Like all investments, it depends on your expectations, flexibility and horizon. The more diversification you are looking for, the less specific you will go. Hence, you will likely be looking into broad based international ETFs versus country specific ETFs. Do not jump the gun without reading the details of an ETF.

Be aware that when buying a broad based international ETF, you could be putting a major percentage of your money into just one or two countries.The country stock markets are weighted by value of the markets. For instance, instead of wanting to invest in diversified Far East You could be putting 40% - 70% of your money at work in Japan depending on the selected ETF. Hence, study the details before investing so you know you are getting into something you want.

If you do not want to be heavily weighted on one or two countries in an ETF, you may want to consider investing your money evenly among a number of countries by buying country-specific ETFs. Buy a number of country-specific ETFs - that way you know your money is going into the right proportion of where you want it to be. Of course providing that you have the money to spread around. Otherwise, buying country specific ETFs for countries that you consider to have growth potential could be an appropriate vehicle to get into foreign investment exposure.

I do regular market analysis at my website: http://www.stocktradinginsights.com

Henrietta does daily updates of the stock market using technical analysis at her website: http://www.stocktradinginsights.com

Source: www.articledashboard.com