Here in Fooldom, we've repeatedly warned investors to think twice before investing in international stocks. There are many reasons for this, such as:
- Despite our many recent Wall Street scandals, the U.S. is one of the most demanding countries in terms of the information that public companies are required to disclose. Here, investors can expect quarterly earnings reports and detailed annual reports. In many other nations, companies are required to file earnings reports only twice a year, or less often.
- Then there's currency risk. If you've invested in a company based in Bhutan, it will likely rake in sales not in U.S. dollars, but in the local currency, the ngultrum. To profit from your stock in that company, you'll want not only growing sales and profits, but also favorable exchange rates between dollars and ngultrums.
- Another critical factor is geopolitical stability. Compared to much of the world, the U.S. is fairly stable. Invest in many nations and you run the risk of your investments' profitability being disrupted by war or other troubles.
Still, for the investor who has deep knowledge of a given nation and is comfortable with and bullish about its prospects, international investing can be effective. Our globetrotter Bill Mann has written often about how to go about it.
But for most of us who don't have global expertise, one way to invest internationally is through mutual funds with an international focus. Here are a few possibilities:
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Tweedy, Browne Global Value Fund (ticker: TBGVX). The folks at Tweedy, Browne are admired by many at Fool HQ for the Foolishness of their investment thinking and strategies. Learn more about the fund and the company at the Tweedy website.
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Oakmark Global Fund (ticker: OAKGX) and Oakmark International Fund (ticker: OAKIX). The Oakmark folks are also well respected, and these funds have solid track records. Learn more.
- Longleaf Partners International (ticker: LLINX). This is also a highly regarded fund family, with a five-star rating from Morningstar. Learn more.
-- If you're hankering for an international index fund, take a look at these contenders: Vanguard Total International Stock Index Fund (ticker: VGTSX), Fidelity Spartan International Index Fund (ticker: FSIIX), Vanguard Developed Markets Index Fund (ticker: VDMIX), Vanguard Tax Managed International Fund (ticker: VTMGX), and Schwab International Index Fund (ticker: SWINX).
Learn more about funds in our newly revised How-to Guide, "How to Pick the Best Mutual Funds." It comes with a money-back satisfaction guarantee, so you've got little to lose.
