In today's rapidly evolving financial world, the global investment landscape has expanded to encompass opportunities across borders, languages, and cultures. International investing, once a niche practice, is now an integral part of any well-rounded investment strategy. The global marketplace is a vibrant tapestry of economies, each offering unique potential for growth and return on investment. As globalization advances, it has become increasingly vital for investors to consider international markets as a fundamental component of their portfolio. Seasoned financial advisor, Sam Sutterfield, CES®, RFC®, AFI® understands the global markets and gives his perspective on opportunities in international investing.

The Benefits of International Diversification

Diversification is the practice of spreading investments across a range of assets, sectors, or geographic regions to reduce risk and enhance potential returns. When applied on a global scale, international diversification becomes a potent strategy with numerous advantages.

"International diversification helps investors mitigate risk by reducing their dependence on a single market's performance," says Sam Sutterfield. "Global markets do not always move in sync; when one market experiences a downturn, another might be thriving."

This geographic diversity ensures that if one market experiences a setback, the overall impact on the investment portfolio may be cushioned. International diversification provides investors access to the high-growth potential of emerging markets. These economies, often characterized by rapid industrialization and increasing consumer demand, offer unique opportunities for substantial returns on investment. By participating in emerging markets, investors may capture growth that may not be readily available in their home country.

Assessing Global Investment Opportunities

When delving into the realm of international investing, it's essential to assess the myriad of opportunities available. This involves a comprehensive examination of various asset classes, international markets, and industry sectors. Here, we'll break down the key elements of this evaluation.

Notes Sutterfield, "International investing offers a broad spectrum of asset classes, including stocks, bonds, real estate, and commodities."

Each class carries its own risk-return profile, making it crucial to diversify across these assets to optimize the portfolio's performance and risk management. Established markets in countries like the United States, Canada, and Western Europe offer stability and liquidity. Investors are drawn to these regions for their well-established regulatory frameworks and mature financial markets. These markets, found in regions like Asia, Latin America, and Africa, present unique opportunities for growth. With burgeoning middle classes and increasing consumption, they offer the potential for higher returns, albeit with higher volatility.

Risks and Challenges in International Investing

While international investing presents enticing opportunities, it also carries inherent risks and challenges that require careful consideration. This section will shed light on the potential pitfalls and strategies to navigate them effectively. Political instability, changes in government policies, and regulatory hurdles can have a significant impact on investments.

"The unpredictability of these factors in foreign markets can lead to sudden disruptions and financial losses," says Sutterfield.

Mitigating risks involves careful planning and diversification. Investors can consider strategies such as hedging currency exposure, conducting thorough due diligence on the political and regulatory climate in the target country, and diversifying their investments across various countries and asset classes to spread risk.

Building a Global Investment Portfolio

Constructing a diversified international portfolio is a key component of successful international investment. To navigate the global markets effectively, investors should follow a structured approach, monitor their portfolios, and maintain a long-term perspective. Begin by defining your investment objectives, risk tolerance, and time horizon. Based on these factors, create an asset allocation strategy that outlines the percentage of your portfolio allocated to various asset classes, including stocks, bonds, real estate, and commodities.

Choose the appropriate investment vehicles for your portfolio. Diversify your portfolio across different geographic regions and industry sectors. This spread minimizes risk by reducing exposure to the performance of any single country or sector. Be sure to conduct thorough research to identify regions and sectors with growth potential.

Regularly monitor your international portfolio to ensure it aligns with your investment goals and risk tolerance. Over time, asset values may shift, potentially causing your portfolio to deviate from your target allocation. Rebalancing involves adjusting your holdings to restore the desired asset allocation, thus maintaining your risk-return profile.

Successful international investing requires patience and a long-term view. Market volatility and short-term fluctuations are common, but over extended periods, the potential for growth in global investments becomes more apparent. Embrace a long-term perspective to withstand market turbulence and capitalize on international opportunities.

The journey to international investment may appear complex, but the rewards are, more often than not, worth the effort. By embracing global opportunities and developing a well-rounded strategy, investors can position themselves to seize the potential for growth while managing risks effectively. Whether you are a seasoned investor or just beginning to explore international markets, international diversification offers a path to expand your financial horizons and achieve your investment goals.

About Sam Sutterfield

Sam Sutterfield, CES®, RFC®, AFI® is the co-owner of Elevate Wealth Management and is an Accredited Investment Fiduciary (AIF®). He leads his firm in offering a vast range of investment planning strategies to his clients through a specialized team approach. Mr. Sutterfield gained experience in the banking and financial sectors with Wells Fargo. He holds his Bachelor of Science in Marketing from the University of Minnesota. He is passionate about giving back to the community and actively volunteers with local charitable initiatives.

Securities and advisory services are offered through Centaurus Financial Inc., Member FINRA, and SIPC, a Registered Investment Advisor. Centaurus Financial Inc. and Elevate Wealth Management are not affiliated.  This is not an offer to sell securities, which may be done only after proper delivery of a prospectus and client suitability is reviewed and determined. Information relating to securities is intended for use by individuals residing in Arizona, California, Colorado, Massachusetts, Minnesota, Nebraska, Nevada, New Mexico, Texas, Virginia, Washington, & Wisconsin.

Supervisory Address: 2300 E Katella Ave Suite 200 Anaheim, CA 92806

References

What Is Asset Allocation? - Forbes Advisor

International Investing | Investor.gov

Emerging Markets - Definiton, How it Works, Examples (corporatefinanceinstitute.com)