With unemployment high, stock markets off previous levels, federal deficit in the trillions and a depressed dollar, the U.S. may be losing its edge. Don’t lose heart; look at global exchange traded funds (ETFs) instead.
Still, venturing abroad has its own set of risks – such as currency and political volatility – and emerging markets are 60% more volatile than the rest of the world. Another factor is that foreign stocks may already reflect high growth, which make them less of a bargain, remarks Jim Gallagher for DailyMe.
But putting that aside, there are big reasons to consider these markets as a portion of your portfolio.
The International Monetary Fund (IMF) calculates that U.S. economic growth will be 2.7% this year, 1% in the eurozone and 1.8% for Japan. It’s growth, sure. But look at forecasts elsewhere: China is projected to grow 10%, 7.7% in India and 4% in Mexico. In emerging markets overall, a growth rate of 6% is projected. [How to Choose Emerging Market ETFs.]