Securities markEt
Investing in
closing bell
Len Goodman
emeRgIng markets
If you’ve been a bit shy
Len Goodman
about opening your has been a stockbro-
portfolio to emerging
ker, pension fund
markets, it may be time
manager, and day
trader. His specialty
to make the move.
is investing in stocks,
stock options, and
emerging markets.
Len is currently
Since the phenomenon of globalization thrust itself upon us, on the funds’ rather sizzling past perfor- the editor for the
incredible economic strides have been made by the once “less- mances and, as you know, that does not
Options University
developed countries.” The rising tide of prosperity these countries guarantee future results. Probably the
newsletter and has
have enjoyed has manifested itself in the eye-popping market best idea is to check with Morningstar
written several books
returns during the past decade or so. at morningstar.com for the latest ratings
for beginning and
advanced investors.
In fact, the Emerging Markets Index (MSCI) has grown and analysis.
34.78 percent on average for the past five years. This tremendous I’m partial to exchange traded funds
success spurred countless investment advisors to promote (ETFs), because they normally have lower management fees and
emerging markets, but many investors still seem unconvinced are much more liquid. And maybe most important, ETFs have
that these markets are safe. options that can be used to protect unrealized gains, something
open-ended mutual funds do not have.
Shifting tides
Bottom line: I would recommend allocating about 15 percent
The doubters primary argument: They think the fairy-tale
to 25 percent of your portfolio for emerging market investments,
growth of the emerging markets depends mainly on the voracious
depending on your age and risk tolerance. Personally, I like the
consumption of the industrialized world. And because the U.S.
following funds with the respective weightings:
markets seem to be headed for a bumpy road during the next
several months, investors with this mind-set may shy away
ETF COUNTRY FUND SYMBOL WEIGHTING
from speculating on emerging markets.
But it seems a “tipping point” has been reached. These emerg-
India IFN 30%
ing markets appear to be uncoupling from the emerged markets.
China FXI 20%
Therefore, they may prove to be an excellent place to put your
Korea EWY 15%
investment dollar — not only for long-term growth but also to
Brazil EWZ 15%
hedge against the cloudiness growing in our domestic markets. Turkey DWTRD 10%
Many investors may still harbor a subconscious denial that Chile ECH 10%
the United States could lose its place as the engine for global
growth. But when you think about it, there is a huge demand Again, as with all investment recommendations, there are
in the emerging markets for just about everything from concrete no guarantees. And I suggest you research emerging markets
to wheat. And increasing per capita income in those regions thoroughly and develop your own conclusions before choosing
helps fuel the fire for domestic consumption. where to put your money.
Additionally, trading among the emerging markets as well as
with other countries will help to sustain continued consumption
get in the game!
and production. In other words, the old saying that “when the
No doubt the story of emerging markets is compelling; real
U.S. gets a cold, the Third World gets pneumonia” may be
economic progress is taking place. A new level of consumption
changing. That’s why many forecasts predict the emerging
promoted by new jobs, consumer credit that until recently
markets will produce higher returns for investors in 2008.
was nonexistent, and a true hunger to improve residents’ lives
materially have given the emerging markets a growing importance
Where to invest and presence — both as consumers and as producers servicing
There are many vehicles for investing in the emerging markets. other countries.
One of the most popular is the subset of open-ended mutual So, if you have been standing on the sidelines, you need to
funds, such as Fidelity Spartan International Index Fund (FSIIX), reconsider. Now might be a good time to get off the bench and
Masters’ Select International (MSILX), and Vanguard Total get your portfolio in the emerging market game.
International Stock Index. But these are only suggestions based Len Goodman can be reached at ljgoodman44@yahoo.com
growingwealthmag.com I Growing Wealth I July 08 I 67
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