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The ways of international investors are changing, particularly as they get more access to granular information, such as trends in particular countries, currencies, and sectors. It’s more important than ever for those building a portfolio to work with a firm that has a strong background in international business and investing. While multiple international financial crises exist, it can still be extremely profitable to invest internationally.
Step one of international investing is to have a solid investment firm behind you. Luckily, there are plenty of these on the market: J. C. Flowers & Co., for example, comes to the table with $14 billion in 32 portfolio companies across 14 countries, as well as an active community service mindset. TPG is also known for its wide array of international investment options, and ACON Investments focuses on middle-market private equity, to name just a few.
The sheer amount of investment information available to these kinds of companies now is overwhelming. Wider global exposure means trends can be monitored around the world, not just in the home country. Exchange traded funds, or ETFs, can now provide investors with detailed information regarding their country, currency, sector, and weighting scheme. The distinction between established and emerging markets, once an important investment consideration, is less of a focus these days, according to John Lundt, CEO of Lundt Capital. “It’s not such a helpful distinction anymore,” he said in an interview with NASDAQ.com’s Aniket Ullal. “For example, one of the debates in international investing is whether South Korea should be classified in developed or emerging markets. The right question is, Do we want to own Korea or not, and what are the dominant sector exposures in Korea that would make you want to own it?”
Even with professional help and a wider net of investment information, why are investors still interested in international markets with financial crunches such as the Greek debt and the plummeting Chinese stock market causing unrest?
Financial crises tend to come and go.
Greece has been dealing with potential debt default for several years, always receiving a bailout. Though China’s stock market fell abruptly in July, overall growth continues to climb, albeit at a slower pace than previously. In other words, ups and downs are normal and don’t necessarily affect the general profitability of international investments.
Economic growth in the US is slowing down.
The US GDP fell about 2.2% during the second quarter, while international markets are projected to continue to expand. US investors are already moving toward diversifying by investing internationally, and that trend is only likely to increase. “I really see opportunities everywhere,” said Lundt, “though Asia is clearly top of mind due to the demographics and country-specific growth factors.”
Powerful foreign central banks are working to keep interest rates low.
While the Fed considers an interest rate increase, Europe and Japan are both working to keep inflation down and to boost liquidity by keeping interest rates low. This makes investment easier, as businesses are looking to grow. So even with political and financial concerns, world markets are still likely to move upward.
The verdict is in: it’s a great time to look into international investments, what with plenty of professional advice, detailed data, and welcoming foreign markets in play.
