Monday, August 20, 2012

Using ETFs To Invest In Foreign Stocks | Penny Stocks

Why Using ETFs To Invest In Foreign Stocks Makes Sense

Using ETFs To Invest In Foreign StocksUsing ETFs to invest in foreign stocks is one of the easiest and safest ways to gain exposure to foreign stocks.? With some foreign economies outside of the United States growing significantly faster than the United States? economy, investors looking for substantial stock market returns are increasingly looking for ways to invest in foreign stocks.? Exchange Traded Funds (ETFs) that derive their value from investments in foreign stocks provide investment vehicles for investors to make both broad-based and targeted investments in foreign stocks.

Investing in individual foreign stocks can be especially risky due to differences in accounting practices and government regulations in foreign countries.? Using ETFs to invest in foreign stocks takes away the risk of picking individual stocks and spreads the risk out amongst a basket of stocks that trade on foreign stock markets.? While the performance of ETFs that derive their value from investments in foreign stocks will ultimately be determined by how the stocks held by the ETFs perform, at least the holder of such ETFs does not have be concerned about a total loss of investment capital due to the failure of an individual company.

Examples Of Using ETFs To Invest In Foreign Stocks

The following are some examples of using ETFs to invest in foreign stocks.? This is by no means a complete list of ETFs that provide investments in foreign stocks.? If you are considering investing in stocks in a particular foreign country or region, it is recommended that research be performed on ETFs available for that foreign country or region.

An example of an ETF that makes investments in stocks throughout the whole, with the exception of the United States, is SPDR MSCI ACWI ex-US (NYSE: CWI).? An example of an ETF that makes investments in stocks in emerging markets is iShares MSCI Emerging Markets Index (NYSE: EEM).? An example of an ETF that makes investments in stocks in developed markets is Guggenheim EW Euro-Pacific LDRs (NYSE:EEN).? An example of a regional ETF that makes investments in stocks in the Latin America region of the world is iShares S&P Latin America 40 Index (NYSE:? ILF).? An example of a country-specific ETF that makes investments in stocks in India is iShares S&P India Nifty 50 Index (INDY).

Using ETFs to invest in foreign stocks is a good way to diversify an investment portfolio away from exclusively domestic companies and into fast growing foreign markets.? However, using ETFs to invest in foreign stocks should be done in moderation, since concentrating too much of an investment portfolio in a particular foreign country or region can expose an investment portfolio to excessive downside risk, if stocks in a foreign country or region suffer a significant price decline.

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Source: http://www.stockrockandroll.com/etf/using-etfs-to-invest-in-foreign-stocks/

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