Go Global With Funds

If you could buy any stock in the whole wide world, which one would it be?

Seems like a simple exercise -- along the lines of picking your favorite athlete, cereal or movie star, maybe. But it's actually quite complicated, considering the options available in domestic stocks as well as those listed on European, Asian and emerging markets.

It's also a challenge faced by more and more global stock fund managers as the dollar's decline pushes investors to diversify internationally. Unlike most foreign funds, which buy stocks from a single country or region outside the U.S., global funds mix domestic and international stocks. That set-up forces the fund manager to allocate not only among their favorite stocks, but in various countries as well.

Due to the integration of U.S. and non-U.S. stocks, global funds are often recommended as core holdings so investors can avoid overlap in their portfolios. And when choosing a particular global fund to be the cornerstone of one's holdings, Karen Papalois, analyst at fund tracker Morningstar, advises investors to seek out fund managers dedicated to finding the best opportunities wherever they are instead of simply trying to mix and match international and domestic funds from their own fund families.

"The key is to find a fund that is thoughtfully put together, because there are a lot of moving pieces when it comes to global funds," says Papalois.

She also recommends avoiding funds that are too rigid when it comes to splitting up assets among countries, something that cannot be said of Francis Claro and Donald Bisson, portfolio managers for the $176 million (EKGAX Quote)Evergreen Global Opportunities fund. The pair recently raised their domestic stake to 35% from 30% after the two fund managers determined "the dollar has already taken most of its beating."