Ask the Expert: How Do I Invest in Foreign Markets?
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In the 1990s, most American investors were xenophobes.
With the U.S. economy and stock market growing at a fast clip, investors saw little reason to invest abroad. The Asian financial crisis and problems in Mexico and Latin America only added to investors' sense of isolationism.
But times have changed. The U.S. markets aren't likely to be as strong over the next few years as they were in the prior decade. Meanwhile, other countries such as China are showing real promise.Of course, there's no way to know which region will outperform, and that's why analysts say it's best to diversify. The question is, how can you get this foreign exposure? Although it is possible to buy foreign stocks on the local exchanges where they are traded, it's much easier to buy American Depositary Receipts. ADRs, as they are known, are foreign stocks listed on American stock exchanges or sold over the counter. The beauty of ADRs is that they are traded in U.S. dollars, so investors don't have to worry about international transaction costs. What's more, ADRs are subject to the reporting standards and disclosure rules of the Securities and Exchange Commission. There are currently over 2,000 ADRs available for purchase. For more information or to search for specific ADRs, there are
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