Stan Luxenberg
"If you think that your paychecks will be correlated to the U.S. stock market, then you should consider putting most of your investments abroad," says Gambera.
Besides urging investors to buy more foreign stocks, some analysts have been advocating an increasingly popular strategy known as global investing. In the traditional approach for holding foreign stocks, an investor might have two funds -- a U.S. domestic specialist and a foreign one. The domestic manager might look for the best U.S. technology companies, while the foreign fund would seek overseas technology champions. In the new global investing, the manager tries to find the best technology companies without regard to where they are located. A global fund holds a mix of foreign and domestic stocks, and makes no effort to control the overseas allocation. At a time when more companies are becoming truly global, portfolio managers should have freedom to seek stocks outside national boundaries, says Timothy Noonan, managing director of Russell Investments. Noonan says the transition to global investing will occur gradually. Russell recently introduced a conservative balanced fund that has 30% of total assets in U.S. stocks, 17% in foreign stocks and 4% in a global fund. In coming years, the allocation to global funds and foreign stocks may be increased as investors become more comfortable with the new way of viewing markets. Noonan says that Canadians and Europeans have already adopted global investing. U.S. investors will soon follow. "Americans have a home-country bias, but that will change as investors recognize that there are many fine stocks overseas," says Noonan.
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