Get Familiar With Foreign Stocks

Foreign stock ownership is becoming less and less of a foreign concept in this country. Companies ranging from Sony (SNE Quote) and Nokia (NOK Quote) to Royal Dutch (RD Quote) and Infosys (INFY Quote) have made their mark far from home.

But beyond the big names, overseas stocks -- and the mutual funds that focus on them -- continue to hold some mystery. Getting past that is important, since anyone looking to build an investment portfolio using the asset allocation model is going to need some foreign stock exposure. (See last week's first two installments in the asset allocation series, on small-caps and big-caps.)

Most financial advisers recommend a foreign stock allocation for their clients' portfolios. Some recommend as much as 20%, depending on risk tolerance. And because of the constraints surrounding the purchase and sale of most individual foreign stocks (i.e., time differences, costs, etc.), most investors are far better off in mutual funds with experienced managers rather than attempting to navigate European or Asian bourses alone. ...