international exposure

Does anyone on this board think that it is important to have international exposure in their portfolios?

If so, how do you accomplish that, ie- do you buy stocks in foreign corporations, or shares in international mutual funds?

I’ve got shares in 2 different mutual funds that invest primarily in non-U.S. stocks. They have not been doing great, but I’m not sure I’m up for investing directly in foreign stocks…that’s a bit out of my league.

Thoughts?

When I checked, I discovered that I have more foreign companies than I thought - NXP Semiconductor (Dutch), ING Bank (Dutch), Michael Kors (UK), Canadian Solar (actually more Chinese than Canadian), Fairfax Financial (Canadian), Solar Edge (Israeli). I also had Broadcom (Singapore?) for a while.

I wasn’t trying to buy outside the USA, and these companies tend to do a lot of business in the USA, so it doesn’t “feel” like I’m diversifying all that much.

There’s also the issue of companies changing their headquarters in name, in order to reduce their US taxes. Medtronic and Burger King, for instance.

One disadvantage of foreign stocks is that some countries will take a tax off the top of your dividend. Netherlands, for instance. NXP has no dividend, but ING has a fairly big one. The Dutch tax and the ADR custody fee take almost 20%.

In the end we are all internationally exposed. Look SKX, SHOP, TWLO, Apple, et al. SHOP still has not penetrated the international market to any great extent, but it is part of its long-term growth plan. As for the rest of the companies, and probably, practically, every decent company on NASDAQ and probably NYSE, just like at the box office for movies, the international market matters nearly as much, if not as much or more, than the United States market.

So if China goes down, U.S. companies go down, and vice versa, etc. Skechers sales collapse, etc.

There is no such thing as a company without material international exposure other than perhaps some domestic monopoly or a company like Georgia Power or domestic utilities. And even there, they are somewhat dependent on commodity prices that are set by international events.

Tinker

SHOP still has not penetrated the international market to any great extent
This might help…
http://discussion.fool.com/1081/shopify-launches-payments-securi…
Unless you don’t consider UK as “international”.
:wink:
Ant

Does anyone on this board think that it is important to have international exposure in their portfolios?

The idea of “international exposure” comes from modern portfolio theory (MPT) which seeks to reduce portfolio volatility by having non-correlated assets, in simpler words, safety in diversification. I don’t think that it is necessary to have “international exposure” for diversification, you can do it with US assets with the added benefit that you don’t have ForEx risk and you trade in the “best regulated” market.

If so, how do you accomplish that, ie- do you buy stocks in foreign corporations, or shares in international mutual funds?

Buying American multinationals gives you lots of exposure to world markets and occasionally you find a foreign stock that is appealing in its own right (ARMH, CLB, NVO).

Denny Schlesinger

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