American ownership of foreign equities has increased substantially in recent years as smart investors have come to realize just how much they need international and currency diversification in their portfolios. Yet many individual investors, disarmed by language, currency, and regulatory barriers, aren't putting their money in specific foreign stocks.

So what are they doing? They're handing their money over to index-tracking exchange traded funds (ETFs) ... in droves.

"In droves"?
According to a recent Wall Street Journal article, global ETF assets have "nearly doubled to $82.2" billion over the past year. And the list of global ETFs is growing. You can invest across the entire world via the iShares MSCI EAFE Index (EFA), which counts Nestle, Vodafone (NYSE:VOD), and Toyota Motor (NYSE:TM) among its top holdings, or you can drill down and invest in specific countries like Belgium (EWK), South Africa (EZA), Brazil (EWZ), and China (FXI). The list goes on.

And an investment in any one of these ETFs will give you exposure to the major players. The China ETF, for example, counts PetroChina (NYSE:PTR), ChinaMobile (NYSE:CHL), and Bank of China among its top holdings, while the Brazil ETF includes names you might know, such as Companhia Vale (NYSE:RIO), Gerdau (NYSE:GGB), and Petroleo Brasileiro (NYSE:PBR).

But you can do better
Of course, ETF investing has its drawbacks. First and foremost, these funds are tied to indexes. Managers can't make any moves based on strategy, valuation, or sound research. And while that can take some bias out of the stock selection process, it means you won't ever outperform the market.

That is a particularly interesting realization in light of a recent Wall Street Journal report concerning manager ownership of the ETFs they run. In two words: They don't.

While studies have long proved that funds whose managers have a significant stake invested in their fund do better than their peers, ETF manager investment in their own ETFs is paltry. According to the article, managers at State Street and Barclays were invested in just six of the 100 ETFs they managed. And if you're like me, that fact may make you think twice about the benefits of ETF investing.

So do better
Of course, I'm not here to dismiss the convenience of ETFs or the returns that international ETFs have offered over the past few years. In fact, my wife and I have nothing but good things to say about our run thus far in Vanguard Emerging Markets (VWO).

But investors with the time and patience to pick their own foreign stocks stand to do better -- particularly given how much money has flowed into foreign markets over the past few years. The investors who will do the best are nimble investors who, unlike ETF managers, can invest based on strategy, valuation, and sound research.

If that sounds like the way you want to proceed but you need a little help getting started, consider trying out our new Motley Fool Global Gains international investing service free for 30 days. Our team recommends two international stocks each month and offers insight on how to find better international stocks on your own. Click here to learn more.

Tim Hanson owns shares of Vanguard Emerging Markets. Vodafone is a Motley Fool Inside Value pick. The Fool's disclosure policy would like to take a minute, so just sit right there, to tell you how it became the prince of a town called Bel-Air.