One of the biggest benefits of foreign (non-U.S.) investments is diversification of an investor's portfolio. When the U.S. stock market is in a slump, companies overseas may be flourishing. In addition, many profitable companies worth investing in are headquartered outside the borders of the United States. Thus, international investments provide an opportunity for capital appreciation. The risks of international investments include political instability in certain countries, market risk, and currency fluctuations. To reduce this risk, many investors choose to invest in mutual funds or exchange-traded funds that hold a large portfolio of international securities. Within a mutual fund, international funds often have higher management fees than funds that invest mostly in domestic securities.
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