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Did you hear? Traders in Cairo watched their local stock
market gain +1,588% over the past five years (for the period
ended June 11). The story was similar in the Ukraine, where
stocks gained +1,572%, and in Peru, which inked a +1,031%
advance.
Not many people, even financial experts, know about
those eye-popping results, so you shouldn't feel bad if you
missed these incredible returns.
But the odds are you'll miss the boat completely on
gains like that if you keep investing the way you always
have. And then you might feel like kicking yourself, because
capturing these impressive triple- and even quadruple-digit
gains is surprisingly easy to do.
Now, not long ago, that wasn't true. Most investors
simply couldn't participate in faraway markets like Egypt,
Peru and the Ukraine. But today, no American has to miss the
international investment party: The far side of the world is
as close as your computer. It's simple -- and astonishingly
inexpensive -- to invest in international markets. You can
even use the same brokerage account you have now.
Consider these three opportunities:
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Mexican bonds with a 10% coupon. These
sovereign bonds are investment grade, according
to Moody's and Standard & Poor's, both of which
give the country a "stable" outlook. To sweeten
the pot even more, the peso has gained +8.8%
against the dollar so far this year, which
magnifies returns for U.S. investors.
A bond investors paid 10,000 pesos for on Jan. 1
cost $917.90, but it's going to yield nearly
11%, as the 1,000 pesos in interest are now
worth $99.86 instead of $91.79. A 10% coupon is
nice enough, but an 11% actual yield is even
nicer.
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The Yellow Pages Income Fund, a
limited-purpose trust in Canada. It's paying
a rich 12.4% dividend yield. You like that
the trust, which owns the phone book, has
increased its total revenue by +155.0% since
2004, but you love that its net income has
burgeoned by +397.2% in the same time. The
higher a trust's net, the higher it's
payout, period. It must pass the money to
its owners.
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Trygvesta, an insurance company that
operates in Denmark, Norway and Finland.
Shares in the company, which trade in
Copenhagen, were first offered in October
2005. They've since gained +111.8%, turning
a $10,000 investment into $21,180.
That's not bad, but check out the icing on
the cake: The Danish krone, in which
dividends are paid, has risen +40% against
the dollar. That means long-term U.S.
holders are earning a 10% dividend yield in
dollars -- far greater then the current 4.8%
yield that's being paid today to investors
who buy in krones. Finally, a way to make
the weak dollar work for you, not
against you!
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How to Buy Assets Most Americans Can't Get Their Hands On
There's a lot to like about all
of these investments. They're on the conservative side,
they're stable, they offer a nice yield. They protect your
assets from a declining domestic market, and they each take
advantage of the weak U.S. dollar.
But there's one problem ...
You can't buy these investments in the United States.
Now, that doesn't mean it's impossible to invest in
these assets. But doing so presents a few challenges. For
one, you'll need a brokerage that can execute trades in
Mexico City, Toronto and Copenhagen. Discount brokers don't,
and even most full-service brokerages aren't set up to
handle these trades. You'll also need a substantial block of
capital and you'll need to be willing to shoulder high
commissions and extra fees. And it would be a good idea to
be conversant with the tax policies of these three countries
so as to judge each investment's net performance.
All of that can be done, of course. But it adds a few
steps.
Surely someone has remedied this, right? Isn't there an
easier way to put your money to work in international
markets?
Absolutely.
And the best part is that the "easier" way is also the
better way. The three investments I mentioned all can
be made without opening a new brokerage account ... without
allocating tens or hundreds of thousands of dollars ... and
without finding a broker or a tax adviser to wade through
all of the rules and red tape.
If you want to gain instant exposure to these three
foreign securities, then you only need to know three letters
-- ETF.
Each of those investments, and a few dozen others that
are just as compelling, can be made by purchasing shares in
Evergreen International Balanced Income Fund, an
exchange-traded fund that trades under the ticker EBI. Your
money will be put to work all over the world, in scores of
fixed-income and equity investments, and you'll receive a
check -- not just each quarter but every month -- that
represents a 10.1% annual divided yield. And here's the
kicker: You can do all this from the same brokerage account
you normally use.
International ETFs Truly Offer a
World of Choices
Investors can choose from more than 500
internationally focused ETFs that offer access to foreign
securities you can't otherwise buy on U.S. exchanges. These
investments are your passport to markets across Europe,
South America and in countries like India and China.
I mentioned the standout returns in Peru, Ukraine and
Egypt. Take a look at Brazil: For the five years ended June
1, the market there was up +781%. EWZ, a fund that tracks
the Brazilian market, rose even higher than that. It notched
gains of +921%. Hold onto your hat: Your dollars in U.S.
markets earned only 1/20th as much during that time!
Now, not only can you put your money to work in scores
of other countries, you also can choose precisely which
foreign sectors you want to invest in: The SPDR series of
ETFs just launched 10 ETFs that cover areas like health
care, telecom and consumer staples.
One of the great benefits of ETFs is their low costs.
Management fees, on average, are a paltry 0.32%. That means
you're only paying 32 cents for every $100 you invest -- you
have more than that in the cup holder of your car!
ETFs offer international securities far, far more
cheaply than if you invested in those countries directly.
EBI's fee is a modest 1.2%, but it's providing a crazy
amount of value by offering not only strong growth but also
a rich dividend stream -- that's the best of both worlds.
Smart Investors Have Always Invested Abroad
The U.S. economy, though huge,
accounts for only 24% of the world's financial picture. That
means most business takes place outside of the United
States. It turns out that putting your money to work
overseas has always been a direct path to gains.
This is especially true with ETFs. Of the 20
top-performing funds with five-year histories, 15 were
internationally focused. Of the top 50 ETFs, 39 of them --
more than three-quarters -- invested outside the U.S.
borders.
If you'd like to learn the names of my favorite ETFs,
plus receive a steady stream of inside information on this
little-known but overwhelmingly large corner of the
investing world, then you might want to check out my premium
investing service -- The ETF Authority. It's the only
newsletter of its kind devoted to helping readers like you
capture the best returns and highest yields the world has to
offer. In my current issue, I profile an ETF boasting a
15.2% dividend yield. After trading at a steep double-digit
premium as recently as three months ago, this fund can now
be picked up near its net asset value.
Good investing!
Nathan Slaughter
Special Guest Contributor, Global Dividend Opportunities
Chief Investment Strategist, The ETF Authority
GlobalDividends.com
839-K Quince Orchard Blvd.
Gaithersburg, MD 20878-1614
P.S.
-- Don't miss a single issue! Add our address, Editors@GlobalDividends.com,
to your Address Book or Safe List. For instructions, go
here.
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