During the past two decades, the United States has never been the best performing stock market in the world for a single year. That distinction belongs to countries like Finland and Peru. Some of the best investment opportunities have been outside the United States.
Further, while many individuals are concerned about the risks of foreign investing, they are often surprised to learn that investing internationally is often an effective way of limiting risk. Foreign markets frequently move in opposite direction to U.S. markets. By investing in multiple companies in a number of different countries, a portfolio is more diversified than a portfolio composed entirely of domestic stocks.
Many international money managers invest in a “bottom up” fashion. That means that they focus on individual companies, rather than on the countries in which they do business.
While we believe that the specifics of a company are of the utmost importance, we take a “top-down” approach. We believe that a country’s political and financial structures play a large part in determining the success of any company in that country.
Specifically, we believe that these countries should legally protect property rights, be politically free, promote a sound monetary policy, limit regulation, assess low corporate tax rates, and advocate free trade.
Once we have determined that a country fits into our investment model, we then begin the work of selecting companies in that country in which to invest. We believe that this “top-down” philosophy sets us apart.
Foreign investing involves risks not associated with domestic investments, including currency fluctuation, different financial and accounting standards, and political instability.