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Did you hear? Traders in Cairo watched their local stock
market gain +1,588% over the past five years (for the period
ended June 11). The story was similar in the Ukraine, where
stocks gained +1,572%, and in Peru, which inked a +1,031%
advance.
Not many people, even financial
experts, know about those eye-popping results, so you
shouldn't feel bad if you missed these incredible returns.
But the odds are you'll miss the boat
completely on gains like that if you keep investing the way
you always have. And then you might feel like kicking
yourself, because capturing these impressive triple- and even
quadruple-digit gains is surprisingly easy to do.
Now, not long ago, that wasn't true.
Most investors simply couldn't participate in faraway markets
like Egypt, Peru and the Ukraine. But today, no American has
to miss the international investment party: The far side of
the world is as close as your computer. It's simple -- and
astonishingly inexpensive -- to invest in international
markets. You can even use the same brokerage account you have
now.
Consider these three opportunities:
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Mexican
bonds with a 10% coupon. These sovereign bonds
are investment grade, according to Moody's and
Standard & Poor's, both of which give the
country a "stable" outlook. To sweeten the
pot even more, the peso has gained +8.8% against the
dollar so far this year, which magnifies returns for
U.S. investors.
A bond investors paid 10,000 pesos for on Jan. 1
cost $917.90, but it's going to yield nearly 11%, as
the 1,000 pesos in interest are now worth $99.86
instead of $91.79. A 10% coupon is nice enough, but
an 11% actual yield is even nicer.
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The
Yellow Pages Income Fund, a limited-purpose
trust in Canada. It's paying a rich 12.4% dividend
yield. You like that the trust, which owns the phone
book, has increased its total revenue by +155.0%
since 2004, but you love that its net income has
burgeoned by +397.2% in the same time. The higher a
trust's net, the higher it's payout, period. It must
pass the money to its owners.
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Trygvesta,
an insurance company that operates in Denmark,
Norway and Finland. Shares in the company, which
trade in Copenhagen, were first offered in October
2005. They've since gained +111.8%, turning a
$10,000 investment into $21,180.
That's not bad, but check out the icing on the cake:
The Danish krone, in which dividends are paid, has
risen +40% against the dollar. That means long-term
U.S. holders are earning a 10% dividend yield in
dollars -- far greater then the current 4.8% yield
that's being paid today to investors who buy in
krones. Finally, a way to make the weak dollar work for
you, not against you!
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How to Buy Assets Most Americans Can't Get Their Hands On
There's a lot to like about all of these investments. They're
on the conservative side, they're stable, they offer a nice
yield. They protect your assets from a declining domestic
market, and they each take advantage of the weak U.S. dollar.
But there's one problem ...
You can't buy these investments in
the United States.
Now, that doesn't mean it's
impossible to invest in these assets. But doing so presents a
few challenges. For one, you'll need a brokerage that can
execute trades in Mexico City, Toronto and Copenhagen.
Discount brokers don't, and even most full-service brokerages
aren't set up to handle these trades. You'll also need a
substantial block of capital and you'll need to be willing to
shoulder high commissions and extra fees. And it would be a
good idea to be conversant with the tax policies of these
three countries so as to judge each investment's net
performance.
All of that can be done, of course.
But it adds a few steps.
Surely someone has remedied this,
right? Isn't there an easier way to put your money to work in
international markets?
Absolutely.
And the best part is that the
"easier" way is also the better way. The
three investments I mentioned all can be made without opening
a new brokerage account ... without allocating tens or
hundreds of thousands of dollars ... and without finding a
broker or a tax adviser to wade through all of the rules and
red tape.
If you want to gain instant exposure
to these three foreign securities, then you only need to know
three letters -- ETF.
Each of those investments, and a few
dozen others that are just as compelling, can be made by
purchasing shares in Evergreen International Balanced Income
Fund, an exchange-traded fund that trades under the ticker
EBI. Your money will be put to work all over the world, in
scores of fixed-income and equity investments, and you'll
receive a check -- not just each quarter but every month --
that represents a 10.1% annual divided yield. And here's the
kicker: You can do all this from the same brokerage account
you normally use.
International ETFs Truly Offer a
World of Choices
Investors can choose from more than 500 internationally
focused ETFs that offer access to foreign securities you can't
otherwise buy on U.S. exchanges. These investments are your
passport to markets across Europe, South America and in
countries like India and China.
I mentioned the standout returns in
Peru, Ukraine and Egypt. Take a look at Brazil: For the five
years ended June 1, the market there was up +781%. EWZ, a fund
that tracks the Brazilian market, rose even higher than that.
It notched gains of +921%. Hold onto your hat: Your dollars in
U.S. markets earned only 1/20th as much during that time!
Now, not only can you put your money
to work in scores of other countries, you also can choose
precisely which foreign sectors you want to invest in: The
SPDR series of ETFs just launched 10 ETFs that cover areas
like health care, telecom and consumer staples.
One of the great benefits of ETFs is
their low costs. Management fees, on average, are a paltry
0.32%. That means you're only paying 32 cents for every $100
you invest -- you have more than that in the cup holder of
your car!
ETFs offer international securities
far, far more cheaply than if you invested in those countries
directly. EBI's fee is a modest 1.2%, but it's providing a
crazy amount of value by offering not only strong growth but
also a rich dividend stream -- that's the best of both worlds.
Smart Investors Have Always
Invested Abroad
The U.S. economy, though huge, accounts for only 24% of the
world's financial picture. That means most business takes
place outside of the United States. It turns out that putting
your money to work overseas has always been a direct path to
gains.
This is especially true with ETFs. Of
the 20 top-performing funds with five-year histories, 15 were
internationally focused. Of the top 50 ETFs, 39 of them --
more than three-quarters -- invested outside the U.S. borders.
If you'd like to learn the names of
my favorite ETFs, plus receive a steady stream of inside
information on this little-known but overwhelmingly large
corner of the investing world, then you might want to check
out my premium investing service -- The ETF Authority. It's
the only newsletter of its kind devoted to helping readers
like you capture the best returns and highest yields the world
has to offer. In my current issue, I profile an ETF boasting a
15.2% dividend yield. After trading at a steep double-digit
premium as recently as three months ago, this fund can now be
picked up near its net asset value.
Good investing!
Nathan Slaughter
Special Guest Contributor, Global Dividend Opportunities
Chief Investment Strategist, The ETF Authority
GlobalDividends.com
839-K Quince Orchard Blvd.
Gaithersburg, MD 20878-1614
P.S.
-- Don't miss a single issue! Add our address, Editors@GlobalDividends.com,
to your Address Book or Safe List. For instructions, go
here.
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