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Best Foreign Stocks To Buy

International stocks: Why bother? For the greater part of the past decade, it hasn't paid to invest abroad. U.S. stocks beat their overseas counterparts in eight of the past 10 calendar years. It's little wonder that many investors now avoid foreign stock markets.

best foreign stocks to buy

Many strategists predict this trend will continue. "We expect international stocks to deliver a superior return to the S&P 500 over the next several market cycles," says UBS chief investment officer of global wealth management Mark Haefele. In other words, it's time for American investors to pack up their stay-at-home strategy and go abroad.

Indeed, many investors are already rushing in, particularly in emerging markets. So far this year, emerging-markets stock and bond funds have experienced huge net inflows. But investing in foreign markets can be tricky. Uncertainty lingers about just what will happen with global economies. The war in Ukraine continues. And investors tend to be fickle about international stocks. "People get very hot and very cold quickly" about foreign stock markets, says David Marcus, chief executive of Evermore Global Advisors, often with little due diligence.

We've come up with several ways to help you navigate overseas markets. Starting with mutual funds and exchange-traded funds, we lay out what we see as the best opportunities, first by broad geographical area and then by region and country. We also highlight six foreign stocks worth buying now. But dip in slowly. "While we expect elevated levels of volatility to persist for the foreseeable future, we also see opportunities for investors amid the fog," says Ben Kirby, cohead of investments at Thornburg Investment Management. Returns and data are as of Jan. 31.

A broad-based foreign-stock index fund is a good starting place to boost your overseas holdings. The Vanguard Total International Stock ETF (Symbol: VXUS (opens in new tab), $56, Expense ratio: 0.07%) owns nearly every publicly traded foreign stock in developed and emerging markets.

The Janus Henderson Global Equity Income Fund (HFQTX (opens in new tab), 1.02%), a member of the Kiplinger 25 (our favorite no-load funds), which focuses on dividend-paying foreign stocks trading at discount prices, has done just that over the past one, three and five years. Looking ahead, comanager Ben Lofthouse thinks the fund is well positioned. The stocks in the fund sport an average price-earnings multiple of nine, based on estimated earnings for the year ahead. "It's quite unusual to see a diversified portfolio invested across all sectors trading at that multiple," he says. "And there's still so much value out there." The fund yields 3.8%.

India is the region's best long-term growth story, but it will take time. "India is set to surpass Japan and Germany to become the world's third largest economy by 2027 and will have the third-largest stock market by the end of this decade," says Ridham Desai, Morgan Stanley's chief India strategist, which means it could be a "once in a generation" opportunity for investors. The WisdomTree India Earnings Fund (EPI (opens in new tab), $33, 0.84%) stands out for its solid long-term returns and average volatility relative to peers. It tracks a proprietary index focused on profits. The more profitable the company and greater a stock's accessibility (ease of trading) to foreign institutional investors, the bigger its weight in the portfolio.

The run-up in the stock's price makes LVMH one of the largest stocks in Europe by market value. But the stock is still cheap: At an ADR price of $175, shares trade at 25 times expected earnings, a discount to its average forward P/E over the past five years of 34.

Most U.S. investors maintain a sizable home country bias: The proportion of U.S. stocks in their portfolio is overweighted relative to their allocation in the global stock market. Some investors prefer to invest solely in U.S. stocks altogether, whether out of patriotism, familiarity or due to their historically high returns. A heavy allocation of U.S. stocks tends to be tax-efficient and reduces currency risk.

That being said, there have been extended periods in which the U.S. market has languished. Consider the "Lost Decade" from 1999 to 2009, during which U.S. stocks posted an annualized loss of 0.7%. The cause of this stagnation was three consecutive years of losses after the 2000 dot-com bubble, followed by a catastrophic market crash during the Great Recession.

"International equities are a core component of a globally diversified investment portfolio," says Christine Franquin, principal and senior portfolio manager at Vanguard's Equity Index Group. "Vanguard's recently released 2023 Economic and Market Outlook expects international equities to outperform U.S. stocks over the next decade, largely driven by lower valuations, higher dividend yields and a favorable currency outlook."

A straightforward, low-cost approach to indexing a high-quality portfolio of international stocks is via FSPSX. This fund tracks the MSCI Europe, Australasia and Far East Index, which provides passive exposure to 805 developed market equities from the eurozone and Asia-Pacific regions.

Emerging market equities are shares of companies from countries like Brazil, Russia, India and China. While these stocks can be quite volatile, they often trade at attractive valuations. A low-cost, diversified way to passively invest in these stocks is via VEMAX.

This fund tracks over 5,500 emerging market stocks weighted by market capitalization, with 34.2% of its underlying holdings coming from China, 17.4% from India, and 16.2% from Taiwan. VEMAX charges an expense ratio of 0.14% and has a minimum required investment of $3,000.

Dividend investors can invest globally too. Looking internationally can net some great companies that pay above-average yields. A great ETF to implement this strategy is WDIV, which holds 91 global dividend stocks that have increased or maintained stable dividends for at least 10 consecutive years.

While WDIV has a 20.2% U.S. allocation, the rest is held in top-quality dividend stocks from countries like Canada, Japan, Hong Kong, the U.K., China and Switzerland, all screened for sustainable payout ratios. WDIV charges an expense ratio of 0.4%.

Perhaps the easiest way to access a globally diversified equity portfolio is via VTWAX, which holds both U.S. and international stocks according to the current market cap weightings. As of Dec. 31, 2022, this fund held 9,473 stocks, with a 59% allocation to the U.S. and 41% allocation to international stocks, making it highly diversified.

Ready to take a trip abroad and scope out some investable brands in far-away lands? As we embark on a new year, it's time to look beyond local businesses, as some of the most intriguing trading opportunities involve international stocks.

Granted, this will require extra due diligence as cross-border investing can entail political and economic complexities that are literally foreign to many retail traders. The rewards could certainly be worth the extra effort, however, as the following top-tier international stocks have "bargain" written all over them - and great deals are always worth a look, regardless of their physical location. Let's take a look, then, at CPG, IGIC, and ASML, three worthy international stock picks for 2023.

Crescent Point Energy, International General Insurance Holdings, and ASML Holding are about as diverse as three companies can be. Yet, they all provide compelling reasons for prospective investors to think outside the box and take a chance on some interesting foreign businesses.

All three of them pay dividends and offer growth potential for this year and the years to come. With this in mind, there's only one conclusion to make: international stocks are definitely worth looking into in 2023, and CPG, IGIC, and ASML could be big winners for open-minded financial traders.

If you want to diversify your portfolio with foreign stocks, but you're nervous about assessing risks in foreign countries, you could consider using a global ETF that diversifies holdings across many countries.

Many advisors recommending keeping international stocks to a relatively small portion of your portfolio. Of your overall stock exposure, you may consider starting with up to 20% of your funds in international stocks. As with any portfolio balance, you should carefully consider your own goals, risk tolerance, and financial situation, rather than blindly following a rule of thumb.

If your foreign stocks are held with a U.S. broker, then brokers will report your foreign stock information on a 1099-B. You can enter this information on Form 1040 when you file your tax returns. If you hold foreign stocks with a foreign financial institution, then you'll need to report those holdings on Form 8938.

Some foreign stocks give dividends and others don't. Just like with U.S. stocks, foreign stocks aren't obligated to issue dividends. In general, those that don't are growth stocks that aim for capital gains instead of dividend payments. More stable stocks offer dividends to make up for the relatively slow business growth.

Whether international index funds are a good investment option depends on your investment goals, strategies, and capital pool. One thing to keep in mind, though, is that diversifying your exposure to international stocks can mitigate your risk and they do have the potential to provide you with a good return on your investment. Just remember that any chance for higher rewards comes with higher risk."}},"@type": "Question","name": "What Is an International Index Fund?","acceptedAnswer": "@type": "Answer","text": "An international index fund is a mutual fund that has a global scope as its focus. Just like other mutual funds, international index funds try to track the performance of a similar benchmark index. Many of them are low-cost funds that come with their own risks, such as currency fluctuations, political issues, and liquidity concerns.","@type": "Question","name": "What Is the Best International Index Fund?","acceptedAnswer": "@type": "Answer","text": "Only you can determine what makes the best international fund for you. As with any investment, you should do your due diligence and research every aspect of the possible options, including the minimum investment requirements, expense ratios, and the overall performance compared to the benchmark. You'll also want to have a fund in your portfolio that matches your investment profile. So, if you're a value investor, you probably shouldn't invest in a highly-risky fund that focuses on growth stocks."]}]}] Investing Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All Simulator Login / Portfolio Trade Research My Games Leaderboard Economy Government Policy Monetary Policy Fiscal Policy View All Personal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All News Markets Companies Earnings Economy Crypto Personal Finance Government View All Reviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All Academy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All TradeSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.InvestingInvesting Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All SimulatorSimulator Login / Portfolio Trade Research My Games Leaderboard EconomyEconomy Government Policy Monetary Policy Fiscal Policy View All Personal FinancePersonal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All NewsNews Markets Companies Earnings Economy Crypto Personal Finance Government View All ReviewsReviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All AcademyAcademy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All Financial Terms Newsletter About Us Follow Us Facebook Instagram LinkedIn TikTok Twitter YouTube Table of ContentsExpandTable of ContentsWhat Is an Index Fund?1. VTIAX2. VTMGX3. FSPSX4. SWISXInternational Index Fund FAQsGuide to Mutual FundsTop Mutual FundsThe 4 Best International Index FundsByAndriy BlokhinFull BioAndriy Blokhin has 5+ years of professional experience in public accounting, personal investing, and as a senior auditor with Ernst & Young.Learn about our editorial policiesUpdated April 22, 2022Reviewed byAndy SmithForeign stocks are an attractive option for investors who want to diversify their portfolios, with brokers ready to assist in making these foreign investments. Index funds that are global in scope and follow a passive investment approach provide a cost-effective means of investing overseas. 041b061a72


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