Traveling to a foreign country can be exciting, confusing, and rewarding. At first, you might feel lost and overwhelmed, but eventually you’ll find your way and enjoy your trip. You may have a similar experience when you add foreign investments to your portfolio. But if you take the time to research foreign investments with your financial professional’s help, you could discover that they’re a rewarding addition to your portfolio.

Adding foreign investments can help diversify* your portfolio and give you some exposure to international markets. And when U.S. markets aren’t performing well, strong economic performance abroad can help cushion the effects on your portfolio.

One way to make investing internationally** less complicated is to invest in mutual funds*** that hold foreign investments. You can choose from professionally managed funds in several categories.

Going Global
Global or world funds hold both foreign securities and U.S. stocks or bonds in their portfolios. The funds buy and sell assets to capitalize on markets that are currently performing well. As a result, there may be times when global funds hold a high percentage of U.S. securities.

Overseas Opportunities
International or overseas funds invest in stock or bond markets in countries outside of the U.S. Funds may buy securities in stable, established economies as well as in the more volatile economies of emerging countries.

A Regional Approach
Regional funds hold investments in a specific geographical region, such as Latin America or the Pacific Rim. The advantage of these funds is that if the economy in one country in the region isn’t doing well, any losses may be offset by investments in other countries whose economies are thriving.

Country by Country
Country funds hold investments in a single foreign country. You can choose a fund that invests in a country with a well-established economy or in one that invests in an emerging economy with the potential for rapid growth. Funds that invest in emerging economies typically have a greater risk of political or economic upheaval affecting their returns.

Understanding the Risks
Whenever and wherever you invest your money, you face the risk that market declines may cause your investments to lose value. There are additional risks when investing internationally. Political and economic instability in foreign countries could have an impact on the value of foreign funds. And changes in the value of the U.S. dollar abroad also could affect your investments.

*Diversification does not ensure a profit or protect against loss in a declining market.
** The risks of investing internationally include changes in currency rates, foreign taxation, differences in auditing and financial standards, and other risks.
*** You should consider the fund’s investment objectives, charges, expenses, and risks carefully before you invest. The fund’s prospectus, which can be obtained from your financial representative, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.

Article is for educational purposes only and is not intended to provide specific tax or legal advice. For answers to tax questions, please see your tax professional. For legal questions, consult an attorney.

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