Foreign markets and related exchange traded funds (ETFs) are showing impressive gains, especially those in emerging markets. Looking abroad may just be the investment strategy your investment portfolio is missing.

Global economies are already hinting at signs of recovery, and this will ultimately translate into better company profits and better share prices, comments Bruce Cameron for Personal Finance.

Cameron suggests looking to investments abroad because the potentially higher inflation rates in the United States as compared to other countries will cause the dollar to further depreciate. Thus, overseas investments would further benefit from the strength of foreign currencies.

Through the use of ETFs, investors are able to track indexes composed of various securities or commodities. ETFs are seen as a low-cost means of investing in foreign markets that would otherwise be inaccessible to the average investor. It is also prudent to diversify foreign holdings to reduce risk in one’s portfolio.

When it comes to gaining exposure in overseas markets, there are ETFs that range from very broad (Vanguard FTSE All-World ex-US (NYSEArca: VEU) to more specific (iShares MSCI Italy (NYSEArca: EWI).

Potential overseas investors should note that emerging markets are considered riskier than those of developed countries. Follow the trend lines, and you would not be amiss to have an exit strategy in place. For more information on trends, visit our trend following category.

  • iShares MSCI Emerging Markets (NYSEArca: EEM): up 60.8% year-to-date


  • SPDR DJ Euro STOXX 50 (NYSEArca: FEZ): up 25.6% year-to-date


Max Chen contributed to this article.

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.