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First Investors - The Benefits of International Investing
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The Benefits of International Investing
“Investors who shortchange their international exposure miss out on the majority of worldwide equity investments.”
The Shrinking Planet
In some ways, the world seems to be getting smaller. With the lowering of trade and political barriers, and the remarkable technical developments of recent years, it’s easier than ever to do business anywhere on the planet, at any time. Look at how this transformation has impacted our everyday lives. Many Americans work at multinational corporations, take international vacations, talk on cell phones with friends in faraway lands, wear clothes made overseas or drive foreign cars. While we have grown accustomed to many aspects of globalization, there’s one area many Americans still steer clear of – investing internationally. According to the Profit Sharing/401(k) Council of America, the average individual investor places less than 3% of his or her portfolio in foreign equities. That allocation can keep investors from benefiting from the world-class opportunities that international investing offers.
Opportunities Overseas
Investors who shortchange their international exposure miss out on the majority of worldwide equity investments. As the pie chart shows, more than half of the world’s stock market capitalization lies outside of the U.S. By shunning these international equities, investors are missing out on the potential gains of many outstanding opportunities.
Total World Stock Market Capitalization as of December 21, 2005
Source: Morgan Stanley Capital International, (MSCI) Inc.
Why Invest Internationally?
Experts often point to asset allocation as one hallmark of successful investing. Spreading your investments among various asset classes – such as stocks, bonds and money market securities – can help lower the overall volatility in a portfolio and potentially boost returns. You can also go one step further and diversify the “mix within the mix.” For example, within the equity allocation of a portfolio, adding an international fund alongside a group of domestic funds can help smooth out returns. That’s because historically, stock markets in the U.S. and abroad have not performed in lockstep. Therefore, by holding a diversified portfolio that includes both domestic and international funds, disappointing performance in one market may be counterbalanced by strong performance in another. The chart below shows that the annual returns of domestic and international markets have sometimes differed sharply over the past 10 years.
U.S. and The World
Annual Performance 1996 to 2005
Note: U.S. stocks are represented by the S&P 500 Index. Foreign stocks are represented by the Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI-EAFE). The results shown above do not represent the performance of any First Investors fund. They do not take into account fees and expenses associated with the purchase of mutual fund shares. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results.
World-Class Performance
Although world markets are cyclical and past performance cannot predict future returns, the recent performance of foreign stock markets has been impressive. In 2005, foreign stocks outpaced their U.S. counterparts for a fourth consecutive year. And, as the chart shows, for the five-year period ended April 30, 2006, the cumulative return for international stocks was nearly three times the return for U.S. equities.
Cumulative Performance
For The Five-Year Period Ended April 30, 2006
Note: U.S. stocks are represented by the S&P 500 Index. Foreign stocks are represented by the Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI-EAFE). The results shown above do not represent the performance of any First Investors fund. They do not take into account fees and expenses associated with the purchase of mutual fund shares. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results.
Explore Emerging Markets
By expanding one’s investment horizons to include foreign markets that are considered developing or emerging (such as Brazil, India or Taiwan), an investor can also discover attractive companies that have not yet been fully valued by the market. These opportunities can add significant upside potential. However, risks may be heightened when investing in emerging markets, which may be less stable than developed markets.
Familiar Names
Foreign investing may seem, well, foreign to many Americans. However, many non-U.S. companies make very familiar products. In fact, some firms, like Bayer (Germany), seem as American as baseball and apple pie. Car manufacturers like Toyota (Japan) and Volvo (Sweden), produce some of the most popular models in America. U.S. cell phone customers are familiar with Nokia (Finland), “gamers” know Sony (Japan), beer drinkers appreciate Heineken (the Netherlands) and athletes are comfortable with Adidas (Germany).
(Please note: The securities of these companies may or may not be in a First Investors fund.)
International Funds & Global Funds
International investing can be very complex for individuals. An effective way for individual investors to participate in the global marketplace is through mutual funds. There are many subgroups of mutual funds that invest in the stocks of companies based outside of the U.S., but they all fall into two broad categories – international funds and global funds. In general, global funds invest in foreign stocks and U.S. stocks. While international funds may also invest in foreign and U.S. stocks, the vast majority (and sometimes all) of their assets are in foreign stocks.
Special Risks
While investing in non-U.S. funds can offer benefits, it also entails special risks. It’s important to consider these risks when deciding how to allocate your portfolio between domestic and international investments. In addition to general market risks, investments in foreign securities involve certain considerations not typically associated with U.S. securities. Those risks include fluctuations in foreign currency and the potential impact of political, economic and social developments in foreign countries. In addition, in comparison to U.S. markets, foreign securities markets are generally less liquid, less regulated and have less uniformity of accounting standards and less publicly available information on companies. Because of the higher level of risk, successful international investing generally requires a long-term commitment. Your First Investors Representative can help you determine if international funds are right for you.
Talk To Your First Investors Representative
For information on international investing, contact your First Investors representative today. He or she can act as your personal “travel agent” of sorts, helping you understand the benefits and risks of international investing. Your representative can analyze your current portfolio, help you pinpoint your goals, gauge your risk tolerance and help you determine if international diversification is right for you. He or she can discuss what products may be suitable for your unique needs and make specific investment recommendations.
Neither First Investors nor its representatives offer tax, legal or estate-planning services. Clients should contact their personal tax and legal advisers for any advice about these matters.
First Investors offers brokerage services. It is not an investment adviser. Although First Investors does offer investment advice to its clients, such advice is solely incidental to its recommendations to clients of specific securities in its capacity as a broker-dealer. We do not receive any compensation for our advice other than the commissions we earn on the sale of mutual funds and other securities. There are differences between broker-dealers and investment advisers, and as a consequence, the customer’s rights and the firm’s duties and obligations to the customer, including the scope of the firm’s fiduciary obligations, may differ.
For more information about First Investors products, you may obtain a free prospectus by contacting your registered representative, writing to the address below, calling (800) 423-4026, or visiting our website at www.firstinvestors.com. You should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information, and should be read carefully before you invest or send money. An investment in a product is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Financial Services With A Personal Touch
First Investors has been serving the needs of investors since 1930. Through the Great Depression, World War II, numerous recessions and bull and bear markets alike, we have remained committed to our mission - helping our clients reach their financial goals. Today, we offer a wide range of financial products and services, including mutual funds, annuities and life insurance. We pride ourselves on delivering financial services with a “personal touch.” Your First Investors Registered Representative is a licensed professional who will take the time to learn about your current financial situation and future goals in order to assist you with your financial needs.
First Investors Corporation
110 Wall Street
New York, NY 10005
www. firstinvestors.com
Find more Informations on First Investors at Naymz
More Resources featuring First Investors on ClaimID
Read the latest News about First Investors on Ign
After reading please visit First Investors Careers and First Investors Repnet
The Benefits of International Investing
“Investors who shortchange their international exposure miss out on the majority of worldwide equity investments.”
The Shrinking Planet
In some ways, the world seems to be getting smaller. With the lowering of trade and political barriers, and the remarkable technical developments of recent years, it’s easier than ever to do business anywhere on the planet, at any time. Look at how this transformation has impacted our everyday lives. Many Americans work at multinational corporations, take international vacations, talk on cell phones with friends in faraway lands, wear clothes made overseas or drive foreign cars. While we have grown accustomed to many aspects of globalization, there’s one area many Americans still steer clear of – investing internationally. According to the Profit Sharing/401(k) Council of America, the average individual investor places less than 3% of his or her portfolio in foreign equities. That allocation can keep investors from benefiting from the world-class opportunities that international investing offers.
Opportunities Overseas
Investors who shortchange their international exposure miss out on the majority of worldwide equity investments. As the pie chart shows, more than half of the world’s stock market capitalization lies outside of the U.S. By shunning these international equities, investors are missing out on the potential gains of many outstanding opportunities.
Total World Stock Market Capitalization as of December 21, 2005
Source: Morgan Stanley Capital International, (MSCI) Inc.
Why Invest Internationally?
Experts often point to asset allocation as one hallmark of successful investing. Spreading your investments among various asset classes – such as stocks, bonds and money market securities – can help lower the overall volatility in a portfolio and potentially boost returns. You can also go one step further and diversify the “mix within the mix.” For example, within the equity allocation of a portfolio, adding an international fund alongside a group of domestic funds can help smooth out returns. That’s because historically, stock markets in the U.S. and abroad have not performed in lockstep. Therefore, by holding a diversified portfolio that includes both domestic and international funds, disappointing performance in one market may be counterbalanced by strong performance in another. The chart below shows that the annual returns of domestic and international markets have sometimes differed sharply over the past 10 years.
U.S. and The World
Annual Performance 1996 to 2005
Note: U.S. stocks are represented by the S&P 500 Index. Foreign stocks are represented by the Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI-EAFE). The results shown above do not represent the performance of any First Investors fund. They do not take into account fees and expenses associated with the purchase of mutual fund shares. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results.
World-Class Performance
Although world markets are cyclical and past performance cannot predict future returns, the recent performance of foreign stock markets has been impressive. In 2005, foreign stocks outpaced their U.S. counterparts for a fourth consecutive year. And, as the chart shows, for the five-year period ended April 30, 2006, the cumulative return for international stocks was nearly three times the return for U.S. equities.
Cumulative Performance
For The Five-Year Period Ended April 30, 2006
Note: U.S. stocks are represented by the S&P 500 Index. Foreign stocks are represented by the Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI-EAFE). The results shown above do not represent the performance of any First Investors fund. They do not take into account fees and expenses associated with the purchase of mutual fund shares. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results.
Explore Emerging Markets
By expanding one’s investment horizons to include foreign markets that are considered developing or emerging (such as Brazil, India or Taiwan), an investor can also discover attractive companies that have not yet been fully valued by the market. These opportunities can add significant upside potential. However, risks may be heightened when investing in emerging markets, which may be less stable than developed markets.
Familiar Names
Foreign investing may seem, well, foreign to many Americans. However, many non-U.S. companies make very familiar products. In fact, some firms, like Bayer (Germany), seem as American as baseball and apple pie. Car manufacturers like Toyota (Japan) and Volvo (Sweden), produce some of the most popular models in America. U.S. cell phone customers are familiar with Nokia (Finland), “gamers” know Sony (Japan), beer drinkers appreciate Heineken (the Netherlands) and athletes are comfortable with Adidas (Germany).
(Please note: The securities of these companies may or may not be in a First Investors fund.)
International Funds & Global Funds
International investing can be very complex for individuals. An effective way for individual investors to participate in the global marketplace is through mutual funds. There are many subgroups of mutual funds that invest in the stocks of companies based outside of the U.S., but they all fall into two broad categories – international funds and global funds. In general, global funds invest in foreign stocks and U.S. stocks. While international funds may also invest in foreign and U.S. stocks, the vast majority (and sometimes all) of their assets are in foreign stocks.
Special Risks
While investing in non-U.S. funds can offer benefits, it also entails special risks. It’s important to consider these risks when deciding how to allocate your portfolio between domestic and international investments. In addition to general market risks, investments in foreign securities involve certain considerations not typically associated with U.S. securities. Those risks include fluctuations in foreign currency and the potential impact of political, economic and social developments in foreign countries. In addition, in comparison to U.S. markets, foreign securities markets are generally less liquid, less regulated and have less uniformity of accounting standards and less publicly available information on companies. Because of the higher level of risk, successful international investing generally requires a long-term commitment. Your First Investors Representative can help you determine if international funds are right for you.
Talk To Your First Investors Representative
For information on international investing, contact your First Investors representative today. He or she can act as your personal “travel agent” of sorts, helping you understand the benefits and risks of international investing. Your representative can analyze your current portfolio, help you pinpoint your goals, gauge your risk tolerance and help you determine if international diversification is right for you. He or she can discuss what products may be suitable for your unique needs and make specific investment recommendations.
Neither First Investors nor its representatives offer tax, legal or estate-planning services. Clients should contact their personal tax and legal advisers for any advice about these matters.
First Investors offers brokerage services. It is not an investment adviser. Although First Investors does offer investment advice to its clients, such advice is solely incidental to its recommendations to clients of specific securities in its capacity as a broker-dealer. We do not receive any compensation for our advice other than the commissions we earn on the sale of mutual funds and other securities. There are differences between broker-dealers and investment advisers, and as a consequence, the customer’s rights and the firm’s duties and obligations to the customer, including the scope of the firm’s fiduciary obligations, may differ.
For more information about First Investors products, you may obtain a free prospectus by contacting your registered representative, writing to the address below, calling (800) 423-4026, or visiting our website at www.firstinvestors.com. You should consider the Fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other information, and should be read carefully before you invest or send money. An investment in a product is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Financial Services With A Personal Touch
First Investors has been serving the needs of investors since 1930. Through the Great Depression, World War II, numerous recessions and bull and bear markets alike, we have remained committed to our mission - helping our clients reach their financial goals. Today, we offer a wide range of financial products and services, including mutual funds, annuities and life insurance. We pride ourselves on delivering financial services with a “personal touch.” Your First Investors Registered Representative is a licensed professional who will take the time to learn about your current financial situation and future goals in order to assist you with your financial needs.
First Investors Corporation
110 Wall Street
New York, NY 10005
www. firstinvestors.com
Find more Informations on First Investors at Naymz
More Resources featuring First Investors on ClaimID
Read the latest News about First Investors on Ign
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