According to the Investment Company Institute, assets in global-equity exchange-traded funds have nearly doubled in the past 12 months, to $82 billion. Many of these funds have posted strong returns over the past several years; naturally, investors are following. With more than 60 global-equity ETFs on the market, they have no shortage of choices.
To understand the popularity of these funds, just look at the iShares FTSE/Xinhua China 25 Index Fund
Other reasons for the growth of global ETFs are that they're easy to trade and they have lower fees than traditional mutual funds carry. In one trade, you can invest in market giants around the world via the streetTRACKS DJ Global Titans
Rather than invest in a single-country fund, you might want to consider something like the BLDRS Developed Markets 100 ADR Index
Don't expect to achieve market-beating returns with global or international ETFs, however. These investment vehicles are designed to replicate stock-market returns of the country or region they're designed around.
Foreign stocks tend to rise and fall in different cycles from U.S. stocks, so having some overseas exposure can help out your portfolio's performance. Of course, there's no guarantee that the returns of any international funds you invest in will remain positive. In fact, the assets of global ETFs peaked at $88.9 billion in April, just before emerging markets had their troubles. Trouble in this context would be -- ahem -- another word for a decline in value.
There's a saying on Wall Street: "There are bulls and there are bears, but pigs get slaughtered." If you can avoid being piggy about performance, maybe you, too, can avoid a financial bloodbath. Look to use global ETFs to enhance your portfolio's diversification, but do remember that global-equity markets have experienced considerable volatility in recent months.
To learn more on ETFs, visit our ETF Center.
For great international stock ideas, pick up a copy of the Fool's first-ever International Report.
Glaxo is a Motley Fool Income Investor recommendation.
Fool contributor Zoe Van Schyndel lives in Miami and enjoys the sunshine and variety of the Magic City. She does not own shares in any of the funds or companies mentioned in this article. The Motley Fool has a disclosure policy.