The easiest way to get broad, diversified exposure is to invest in an international exchange traded fund (ETF). Over the past year, about 40% of net cash flow has gone into international products and strong performance has played a part in overseas investments. As a result, there is a huge influx of international ETFs on the market. This gives investors more options with lower costs but it also means to use caution when selecting an ETF and be careful not to chase performance.

Jen Ryan reports in that it is smart to invest in funds that track an index that is broad and deep; but if you are looking for exposure to a particular region or area there are single country ETFs too.  The largest international ETF is iShares MSCI EAFA (EFA) which has $34.6 million in assets.

It is also important to consider that some ETFs look international but they are actually primarily holding American depository receipts (ADRs). Look at the holdings of each ETF as well as costs, tracking error and wide bid/ask spreads.  Another caution is the added risk of events overseas.  Like with any other investment, having a discipline to sell when the ETF goes below its 200-day moving average or goes 8% off of its high leaves room to avoid some of the risks.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.