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Foreign Investing: Consider ETFs

There are many different options out there for foreign investors. Whether you are a small or large investor in stocks, bonds, mutual funds, real estate or some other class of investment, you have many opportunities available to you. Have you ever considered ETFs as an additional option in your portfolio?

If you are an investor considering a new or different option, you might want to try ETFs. So what exactly are ETFs? ETF stands for exchange-traded funds and they are a flexible option for many investors that have been catching on for the past few years. You buy them just as you would any other stock at a brokerage firm. They track a specific index and are priced throughout the trading day the same as your individual stock would be.
ETFs are also available for many overseas options so you can use them as your foreign investments as well. There are even ETFs for the Dow Jones Industrials and S&P 500. Just remember that Dow Jones and Standard & Poor’s maintain their respective indexes, and that fund groups license the indexes so that more than one fund can end up tracking an index.

One reason why investors are trying out ETFs is because there is little risk of abuse of the structure. The Depository Trust Clearing Corporation ensures that ETF certificates are assigned correctly in a trade. To date there is no known record in the United States of an investor losing money due to a fraudulent ETF.

ETFs are not limited to only stocks either so you have more options to consider. Any asset that has a published index around it and that is liquid can be turned into an ETF so you can find bonds, gold and even real estate written as ETFs. Some international ETFs include European or Pacific Rim funds, as well as individual country funds in relatively well-developed economies. As other developing nations continue to stabilize in the stock market, more and more international ETFs will become available.

ETFs are not only available to the US. In the United States, anyone who can open a brokerage account could buy an ETF. Other countries have them available as well but you would have to check specifically with your country for the requirements.

Comments on this entry are closed.

  • Yep, ETF is slowly getting popular nowadays.
    However, it is still not very commonly known for the general masses.
    I guess more education is needed before more people are aware of what it is and the advantages of investing in ETF verus investing in individual stocks.