Welcome to the long, hot, volatile summer.

If you thought the spring was harsh on international investors, when virtually every stock market around the world followed the


down, this summer could well be worse. Uncertainty about how much the

Federal Reserve

will tighten the screws on the economy and whether it can deftly manufacture a gentle slowing of economic growth has many investors even more skittish about overseas markets than they are about U.S. markets.

That concern could stymie the potential for major rallies. Investors looking to make some quick cash in an overseas market -- as they were able to do easily in 1999 -- are likely to be disappointed. The longer term is a different matter, however.

"The Fed has a big effect globally," says Leila Heckman, managing director of global asset allocation at

Salomon Smith Barney

. She recently conducted a study comparing how overseas markets perform during periods of Fed tightening, easing and neutrality. For every region in the world, and with only a few specific country exceptions, returns were lowest when the Fed was tightening.

So what's an investor wanting to play the overseas markets supposed to do until the Fed hurricane season ends? Sit and do nothing? That's one option, and probably the smart one for those investors with an international portfolio with which they are comfortable. For the risk takers, however, there is undoubtedly money to be made outside the U.S. the next three months.

Unfortunately, at this point, there is little consensus among the investing


as to where to put your money overseas, however. For an industry that is often defined by herd-like behavior, there is little agreement as to which regions and countries may stand out this summer.

Take Japan, for example. "We're overweight Japan and Europe and underweight the U.S.," says David Bowers, chief global investment strategist at

Merrill Lynch

, believing Japan Inc.'s efforts to restructure are real. Nonetheless, he asks, "Is that the way the market is thinking?" Seeing a lack of confidence there, he trimmed his exposure in the country, although he would still have a larger position in the country than a benchmark index.

Stanley Nabi, vice chairman of

DLJ Asset Management

, doesn't share even that somewhat lukewarm endorsement for the world's second-largest economy. "Japan is in purgatory, and will remain in purgatory for quite awhile," says Nabi, pointing to the country's weak financial system.

The differences continue in Europe. While Merrill is overweight in Europe, Soloman's Heckman would stay close to benchmark in the region. She likes the strong earnings and the cheap euro, which will help increase exports. She is concerned about central bank rate hikes in the region, however.

Merrill would underweight emerging markets, Salomon would overweight. Both firms agree Asia and Latin America have significantly reformed their economies, but Merrill sees too much volatility. Nabi is uneasy about the political situation in Latin America and the overvalued peso. Heckman likes both regions, especially Asia, which she believe has been oversold and offers good bargains.

It just goes to show you, like the old joke says, you can line up all the economists in the world end to end, and they still couldn't reach a conclusion.

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The paradox in all of this is the fundamentals of much of the rest of the world look better than in a long time. Europe is finally shaking off some of its economic sclerosis and should post growth in the 3% range this year. It may even equal the U.S. growth by the fourth quarter. Asia is doing well, and Latin America is expected to grow 4% this year. Without the specter of the Fed, investors would certainly be rushing to these markets.

However, because the fundamentals are strong, the long-term prospects (meaning at least looking one year out) are still good. To avoid at least some of the volatility and overall bearishness this summer, investors may want to focus on regional mutual funds, rather than country-specific closed-end funds, or

MSCI I-Shares

(formerly known as

World Equity Benchmark Shares

) -- that is, unless you have a strong hunch about a particular country or a specific foreign company listed in the U.S. (If you do, send me an


The best performing mutual fund in any category remains the


Morgan Grenfell Deutsche European Equity fund, which is up 93.6% this year. However, it requires a minimum investment of $250,000.


Ivy European Opportunities is up 30% year to date. It requires a minimum investment of $1,000, and has an expense ratio of 2.2%.

If you want to try Asia, the

(TGRAX) - Get Invesco Pacific Growth A Report

Morgan Stanley Pacific Growth fund requires only a $1,000 investment and has an expense ratio of 1.79%. It is down 11.5% this year, but remember that some think Asia has been oversold this year. For Japan only, the

(MJFOX) - Get Matthews Japan Investor Report

Matthews International Japan fund is the best-performing fund with modest investment requirements; it requires a $2,500 investment and has an expense ratio of 2%. It is up 1.1% this year.

In Latin America,


Templeton Global Latin America is the best performer in the category. It is down 5.4% this year, requires a minimum $1,000 investment, and has an expense ratio of 2.35%. For a broader fund,

(ODMAX) - Get Invesco Oppenheimer Dev Mkts A Report

Oppenheimer Developing Markets fund invests in Brazil, Mexico, India and Turkey, among other countries. It requires a minimum investment of $1,000, and has an expense ratio of 2.367%. It is up 3.4% this year.

Summer is supposed to the season for enjoying the simpler pleasures of life. For investors looking overseas, this summer could be anything but simple.