Buying into an exchange traded fund (ETF) is an excellent way for passive investors to gain exposure to a range of stocks in a given sector, providing the benefits of diversification to an investor who does not wish to invest the time and energy into picking stocks, but wishes to achieve an appropriate level of risk and return over time.
In investing in international stocks, a number of risks associated with placing one’s hard earned money into a pool of stocks with which one has limited knowledge are obvious. Stock markets around the world have different standards for which companies can be listed, and the metrics used to assess companies are often less transparent.
Additionally, currency exchange risk can be substantial, depending on which regions of the world one wants to invest in – hyperinflation, risks associated with geopolitical issues, and concerns around corporate governance can be difficult to negotiate for the average investors.
One international ETF which does a good job at diversifying to a great extent is the iShares Core MSCI Total International Stock ETF (NYSE:IXUS).
This ETF tracks the entire market for international stocks, covering a wide range of countries, indices, and sectors, offering investors the ability to invest on virtually every stock outside of North America, providing the risk/reward relationship of a truly gobal investor looking at a broad portfolio of companies.
This fund also carries with it a very attractive management expense ratio, making it a great option for investors who do not know where to start.
Invest wisely, my friends.
