If you’re a savvy investor, you have probably noticed a trend: a trend that does not include the U.S at the top of the global investing food-chain. International investing markets and indexes have commanded the majority of the leadership, leaving the United States with a less than fifty percent slice of international funds.

Having a diversified portfolio these days should indeed be rich in international shares—after all, the planet tends to be getting smaller and smaller in a fiscal sense. In addition to layering your assets among money-market funds, stock and bonds that are U.S.-based, diversifying in international funds (in a way) provide a fail safe mechanism when either of the markets (U.S. or international) are volatile.

Risks

Volatility between the U.S. dollar and foreign currencies, which have (as of the few years) have been very favorable to the U.S. international investor

Different economic, political and social factors of international countries can have a dramatic effect on them

Occasionally, some foreign brokerages and companies don’t provide adequate information when compared with others like the U.S. firms. Other cultural differences like language and up-to-date information flow can sometimes be a real hindrance.

Ordinarily, international and global investing can be pricier in terms of fees, taxes, and other factors

Common Cents

Since 1997, foreign stocks have outpaced and almost doubled that of American stocks. With the help of items such as mutual funds, investors take advantage of both international and global funds (these are two different items, despite the synonymous names). Yet another reason for strong international shares includes the weakening U.S. dollar—a value determined by the U.S. Dollar EAFE Index.

There exists a myriad of methods you can use to invest internationally, as well as globally. American Depositary Receipts, direct investments, mutual funds and foreign bonds are just a few of these methods.

One of the favorites seems to be mutual funds, though. They come in international index funds (foreign market index tracking; country funds, which normally invest in specific companies in specific regions; and global funds, which invest in foreign company stocks and U.S. company stocks to a lesser degree. Whichever route you go, though, keep in mind the age-old principle that maintains that past performances are not a guarantee of future trends. Be sure to consider the pros and cons of international investing before jumping in.