Are there investing opportunities because of new trade deals?

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Q. Are there investing opportunities because of the new trade deals? Mexico and Canada, China, whatever is happening with the EU?
— Investor

A. Investing internationally is a great diversifier for your portfolio.

We don’t suggest you make bets based on what you hear in the news. Instead, you should come up with a long-term plan with an asset allocation that will help you reach your goals.

When you invest in non-U.S. companies, you have several options: You can pick individual stocks yourself, you can pick country specific mutual funds or you can use an international fund and let the manager pick the investments.

The first rule of investing is to be properly diversified, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

So, he said, international investing should be part of an overall diversified portfolio of stocks and fixed income.

If you intend to choose individual companies yourself, be prepared for a whole lot of work, he said.

“It may be difficult to obtain sufficient research information on specific foreign corporations. There may also be language problems,” Kiely said. “The United States requires publicly traded companies to use Generally Accepted Accounting Principles (GAAP) when reporting financial information. Foreign companies may not use GAAP so you have to question the reliability of their information.”

If you agree that selecting individual foreign companies is too much trouble, you can move up to country-specific international mutual funds, Kiely said.

“When you use a country specific mutual fund you are hiring a manager that knows the country,” he said. “The manager probably reads and speaks the language. All you have to do is select the country and then select the mutual fund.”

Kiely said his investment clients own international stock and international bond mutual funds as a way to find true diversification.

He said they use broadly diversified international mutual funds.

“We look for international funds with above average returns when compared to other diversified international funds,” he said. “We let the manager decide on what companies in which countries to invest in.”

Good luck making your decisions.

Email your questions to moc.p1579392728leHye1579392728noMJN1579392728@ksA1579392728.

This story was originally published on Jan. 10, 2020.

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