November 14, 2022
Many investors recently are looking to the markets outside of the US to chase higher returns. Typically, international markets are more volatile than within the US generally because of the sheer size of the US markets. Just a few companies that investors are familiar with but may not know are international are companies such as Nestle, Volkswagen or Sony. Like investing is any company’s stock, they have the standard risk, however, there’s also an added layers of risk; currency exchange and import/export laws affect these companies but would not affect domestic companies. This added level of risk may come with higher potential for returns.
International companies are any company outside of the US; however, the implication of International Funds is that they are invested in developed countries such as Japan, Germany, and England. Typically, these countries have set trade relations with the US and have been established in the world market for a number of years and therefore may be less sensitive to changes in policy. These companies are often considered lower risk than undeveloped markets.
Emerging markets are made up of countries that do not have the same footing; Some examples are Brazil, India and China. These countries have less stable economies and are more susceptible to changes in the world market. Russia, for example, used to be on this list of developing countries however since the war in Ukraine it may no longer be considered a prudent investment at this time. The funds that invest in these companies may have huge potential for growth but also pose huge potential for loss. They are considered one of the riskiest places to invest.
Almost all investment vehicles may have a place in a portfolio, including the international markets; you should review and reassess your portfolios often to make sure they are in line with your goals and objectives. If you find yourself curious about the balance you have, let’s start a conversation, today.
Joshua Slish
Financial Advisor
E-Mail: jslish@brightonsecurities.com
Direct: 585.340.2209
https://engineeredportfolio.com/2017/05/13/emerging-market-and-small-cap-outperformance-historical-comparison-of-international-equities/ (Graph 9/24/2022)