Choosing the right international index funds takes some knowledge of global and local markets, along with good analysis of specific fund offers. International index funds are taking off and catching the eyes of many investors, partly because they can make plays on emerging markets, and partly through the broader and relatively stable nature of index funds. Using good judgment will help a single investor add the right index funds to a portfolio.
One of the first questions about international index funds is “where”; investors will want to choose specific regions for fund investment. A vast array of funds offer investment in many different countries and regions of the world, including emerging markets like India and China. Some funds focus on a particular country, and some have a broader scope. Thinking about these key details will help the trader find the funds that are the right fit.
Investors will always want to look at the cost of their international index funds. Like other index funds, emerging markets and international funds come with costs and fees. Traders who are tethered to a single broker will want to find out how that broker values commissions on a specific fund. There may also be an “expense ratio,” which is in annual cost for being involved in the fund, along with a possible “minimum contribution” and other limitations.
Obtaining professional advice for international index funds is a good idea, but investors should not rely entirely on the advice of others. Instead, they should look at each particular stock or equity that is involved in a fund, and ask themselves about the potential upside and downside for each one. Remember that fund investment is basically a strategy for getting into more diverse stocks, rather than picking each one out and paying individual commissions.
It’s not unheard of for an investor to look at how his or her brokerage has access to different parts of the fund when making final decisions. Another big issue is how the fund management cases gains. In some situations, an investor might favor “actively managed funds” where fund managers are always dropping equities and adding others. Since index funds are inherently stable compared to some other types of funds, many of them will be more passively managed, which might appeal to some investors with a more cautious mindset.