The idea that an international fund needs "boots on the ground" to successfully pick foreign stocks is a flat-out fallacy, said Paul Bouchey, chief investment officer at Parametric. 'The vision of a manager traveling to exotic locales, visiting factories with a hard hat on, and finding opportunities that other analysts have overlooked is a fallacy,' said Bouchey. 'With over 70 liquid equity markets in the world, you would need a lot of boots on the ground to realize this romanticized vision.' Bouchey said that private equity deals, infrastructure projects, and private real estate investments require local knowledge. For investing in stocks globally, however, boots on the ground are both costly and unnecessary, in his view. Another international investing misconception in Bouchey's opinion is that fund managers should avoid low quality companies, especially so-called 'state-owned enterprises', or SOEs. In his estimation, usually it is the cheap stocks of unattractive looking companies that have better return prospects and it is not immediately obvious that SOEs are bad companies that are destined to have bad returns in the future.
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