Esta página de Internet está disponible sólo en inglés.

Página principal

International Investing

Many people may feel more comfortable with U.S. companies and products that they know and trust. If you’ve spent your life living and working in the United States, you may better understand the U.S. economy, too. When it comes to investing for retirement, though, should you think beyond the border?

Collectively, foreign stock markets are nearly as large as the U.S. stock market and include some of the world’s largest companies. Yet, many investors do not consider the opportunities that exist internationally. Your retirement plan may offer funds that allow you to invest in foreign markets, but it's important to understand international investing before jumping in.

There are several potential benefits to investing in international markets, such as:

  • Global companies may raise the odds that your portfolio benefits from economic growth, internationally, even when the U.S. economy stumbles.
  • There may be potential for strong economic growth in emerging market economies such as China, Brazil, Poland, or South Africa.

With these opportunities; however, come some additional risks. For example:

  • When investing in non-U.S. stocks, fluctuations in the stock’s local currency against the U.S. dollar may impact returns as foreign investments need to be converted back into U.S. dollars.
  • The potential for political or social unrest could cause the value of underlying investments to decline and pull down the value of the fund.
  • Many foreign companies do not provide investors with the same depth or transparency of information as U.S. public companies, which could make it difficult for the fund manager to evaluate the health of the company.
  • Liquidity is essentially the fund manager's ability to buy and sell investments easily. Foreign markets may have limited hours in a day when stocks can be bought and sold, or they may have holidays where the stock market is closed. There may also be limitations on the amount or type of stocks that foreign investors may purchase.
  • These risks may result in greater share price volatility and the risks are heightened in emerging markets.

The world is full of unexpected surprises that impact the fortunes of countries in unforeseeable ways. Sometimes the good news (or bad) comes from the U.S. economy and sometimes from overseas. International funds may offer additional opportunities to diversify your retirement portfolio. As with all investments, consider the opportunities and risks in light of your investment goals before taking action.