The Challenges of International Investing Are Getting Tougher

Most, Bruce W.
February 1999
Journal of Financial Planning;Feb1999, Vol. 12 Issue 2, p38
Academic Journal
This article examines how U.S. financial planners and their clients have been coping with regards to international investing in 1999. According to financial planners, their clients' exposure to international markets remains in the 10 to 20 percent range they held two years ago. However, planners sound far less firm in their convictions of the virtues of overseas exposure than they once did. Their clients certainly are increasingly dubious about a 10 to 20 percent commitment, and some have cut back on their foreign side. Many clients of Terry A. Balding, certified financial planner of Sun Prairie, Wisconsin, have as much as 30 percent of their portfolio invested internationally. Half of that exposure is in the form of equities, the other half in international bond funds. How much longer clients are willing to maintain international positions at current levels is questionable, however. For some, the painful returns abroad, and the superior returns of the U.S. market, have already been too much. One of the fallouts of the Asian market, coupled with the decline in Latin America, has been that more and more planners are shying away from regional and country mutual funds and turning to broader international funds. While some planners maintain that investors should have some exposure to emerging markets, others are becoming less certain. Balding has clients in developing markets, but he is putting new money only into broad international funds instead of dividing it between them and developing market funds. The euro and the economic melding of 11 European nations under the European Monetary Union (EMU) is intended to grease the wheels of cross-border transactions, making Europe economically stronger.


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