Investing in a Foreign Stock ETF

Investing in a foreign ETF can provide you with a way to get involved in the international market. This type of investment has become very popular in recent years and presents a number of attractive features to the investor. This type of investment is very similar to a mutual fund. The big difference is that it is a type of investment that can be traded on the stock exchange. With mutual funds, you cannot buy or sell shares until the end of the trading day. Foreign stock ETFs can be bought or sold anytime that the market is open. Also, ETFs also tend to have lower expense ratios associated with them which allows you to keep more of your returns.

Diversification

One of the primary advantages of investing in a foreign stock ETF is that you can diversify your portfolio. Many investors put all their money into their own financial markets. When you do this, you are limiting yourself to one market and taking on a big risk. When you put money into another country's financial markets, you can diversify your portfolio. This way, if your country suffers a financial market loss, you can still maintain some of your investments in other countries.

Convenience

Another benefit of investing in this type of ETF is that it is convenient. Most of the time, individual investors can have difficulty getting set up to invest in foreign stocks. You might have to open a brokerage account with a special broker to access this market. However, by investing in foreign stock ETF's, you can generally keep your same brokerage account. You will also not have to convert your money over into a foreign currency to make a purchase.

Risk

This type of investment carries some risks. First, you have to worry about economic risk in the foreign country. Sometimes, the economy of a foreign country may not be very stable and your investment will become volatile. You also have to be aware of political factors that are involved with the country and complete lots of research because different countries have different rules, regulations and governing platforms.

Top Performers

There are a number of countries that you can choose to invest in with this type of investment. You could choose to invest in emerging markets or in countries that are more well-established. One of the most popular countries for investors is Brazil. There are several ETFs that focus on Brazil stocks and they have been doing very well. You could also choose to invest in Austria, Mexico or China. Many Asian countries can be a good investment because that entire area is going through large amounts of financial growth. The Asian market is a favorite for many investors and there are many stock ETF that you could invest in within this market.