(PUB) Investing 2016

638 / 708

12 • Fund Family Shareholder Association
Look, there is a lot to unpack regard-
ing Brexit, so before crossing that pond,
let’s take a step back and consider the
fundamental arguments for allowing
foreign investments to remain in your
portfolio and the arguments for giving
them the heave-ho.
Here are some basics. The first
distinction most U.S. investors make
when considering to remain or leave is
between companies that are based inside
of the U.S. versus those based outside
our borders. So, foreign, international
or global funds invest in companies
based outside of the U.S., like Honda
(Japan), Nestlé (Switzerland), Bayer
(Germany), Nokia (Finland), Akbank
(Turkey) and Samsung (Korea). Global
funds, of course, also invest in U.S.
companies. And you might actually
find a handful of foreign stocks in your
domestic stock funds too.
Foreign countries and markets are
then usually divided into two buckets:
Developed and emerging. Developed
countries and markets tend to be mature
economies with high levels of gross
national income and have histori-
cally been considered less risky than
their emerging markets counterparts.
Examples of developed foreign markets
include Germany, the United Kingdom,
France, Japan and Australia.
Emerging markets, as their name
implies, are in the earlier stages of
economic development. That can mean
they have newer capitalist economic
systems and more fragile markets that
are susceptible to missteps and instabili-
ty—factors that can add to volatility and
risk for investors. Examples of emerg-
ing economies include China, many
countries in Southeast Asia and Eastern
Europe, as well as countries in Latin
America. Recently, emerging markets
have been further subdivided into two
groups: The more established emerging
economies, such as China and India,
and a group of “frontier” markets, such
as Vietnam, Kenya and Ukraine, that are
in even earlier stages of free-market and
investment-market development.
Why Bother?
From an investor’s perspective, it’s
an awfully big world out there. But
there are some investors who would tell
you that you don’t need to bother with
most of it.
The argument for investing strictly in
the U.S. is a favorite of former Vanguard
Chairman Jack Bogle and his acolytes,
who maintain that there’s little diversi-
fication benefit in owning stock in non-
U.S. companies because U.S. companies
already derive a large share of sales and
earnings from business conducted over-
seas. Coca-Cola, the quintessential U.S.
company, has a presence in virtually
every foreign market you can think of.
Coca-Cola may be based in Atlanta, but
it is a global franchise earning profits in
Egypt, Japan, Singapore and the U.K.
Why bother buying a European soda
maker when you can own Coke?
Further, those who argue against
investing overseas will warn that you
add a new and unique risk to your port-
folio—currency risk—when you invest
in stocks that are not denominated in
dollars; hence, you shouldn’t do it.
Match the Market?
Oddly enough, sitting on the oppo-
site end of the spectrum from Jack
Bogle (the father of the consumer index
fund) are the efficient-market adherents.
Using Total World Stock Index as
a proxy, for instance, the U.S. makes up
53% of the value of the world’s stock
markets. That would suggest that just
over half of your stock portfolio should
OVERSEAS FROM PAGE 1 >
500 Index $0.908
500 Index Adm. $0.959
Balanced Index $0.139
Balanced Index Adm. $0.149
Consumer Discretionary ETF $0.405
Consumer Disc. Index Adm. $0.209
Consumer Staples ETF $0.763
Consumer Staples Index Adm. $0.377
Convertible Securities $0.018
Developed Markets ETF $0.482
Developed Markets Index $0.118
Developed Markets Index Adm. $0.155
Dividend Appreciation ETF $0.446
Dividend Appreciation Index $0.171
Dividend Appr. Index Adm. $0.121
Dividend Growth $0.179
Emerging Markets Stock Adm. $0.186
Emerging Markets Stock ETF $0.223
Emerging Markets Stock Index $0.129
Energy ETF $0.544
Energy Index Adm. $0.271
Equity Income $0.214
Equity Income Adm. $0.464
Europe ETF $0.924
European Index $0.483
European Index Adm. $1.158
Extended Duration Treasury ETF $0.822
Extended Market ETF $0.219
Extended Market Index $0.145
Extended Mkt. Index Adm. $0.166
Financials ETF $0.283
Financials Index Adm. $0.142
Global ex-U.S. Real Estate ETF $0.481
Global ex-U.S. Real Est. Idx. $0.178
Global ex-U.S. Real Est. Idx. Adm. $0.291
Growth & Income $0.402
Growth & Income Adm. $0.696
Growth ETF $0.323
Growth Index $0.148
Growth Index Adm. $0.166
Health Care ETF $0.429
Health Care Index Adm. $0.214
High Dividend Yield ETF $0.578
High Dividend Yield Index $0.224
Industrials ETF $0.484
Industrials Index Adm. $0.249
Inflation-Protected Sec. Adm. $0.005
Inflation-Protected Securities $0.002
Information Technology ETF $0.350
Information Tech. Index Adm. $0.179
Int’l Dividend Appreciation ETF $0.199
Int’l Dividend Appr. Index $0.075
Int’l Dividend Appr. Index Adm. $0.096
Int’l High Dividend Yield ETF $0.559
Int’l High Dividend Yield Index $0.219
Int’l High Dividend Yld. Idx. Adm. $0.272
LargeCap ETF $0.426
LargeCap Index $0.160
LargeCap Index Adm. $0.215
Materials ETF $0.431
Materials Index Adm. $0.220
MegaCap ETF $0.368
MegaCap Growth ETF $0.304
MegaCap Value ETF $0.386
MidCap ETF $0.469
MidCap Growth ETF $0.151
MidCap Growth Index $0.046
MidCap Growth Index Adm. $0.065
MidCap Index $0.117
MidCap Index Adm. $0.580
MidCap Value ETF $0.447
MidCap Value Index $0.165
MidCap Value Index Adm. $0.230
Pacific ETF $0.457
Pacific Index $0.082
Pacific Index Adm. $0.565
REIT ETF $0.764
REIT Index $0.243
REIT Index Adm. $1.082
Russell 1000 ETF $0.438
Russell 1000 Growth ETF $0.355
Russell 1000 Value ETF $0.496
Russell 2000 ETF $0.313
Russell 2000 Growth ETF $0.174
Russell 2000 Value ETF $0.344
Russell 3000 ETF $0.409
S&P 500 ETF $0.953
S&P 500 Growth ETF $0.339
S&P 500 Value ETF $0.484
S&P MidCap 400 ETF $0.235
S&P SmallCap 600 Growth ETF $0.232
S&P SmallCap 600 Value ETF $0.266
SmallCap ETF $0.304
SmallCap Growth ETF $0.359
SmallCap Growth Index $0.091
SmallCap Growth Index Adm. $0.125
SmallCap Index $0.128
SmallCap Index Adm. $0.145
SmallCap Value ETF $0.320
SmallCap Value Index $0.069
SmallCap Value Index Adm. $0.138
Social Index $0.051
STAR $0.170
STAR Cons. Gro. $0.107
STAR Growth $0.294
STAR Income $0.080
STAR Mod. Growth $0.241
Target Retirement Income $0.061
Telecom Services ETF $0.593
Telecom Svcs. Index Adm. $0.302
T-M Balanced Adm. $0.138
T-M Capital Appreciation Adm. $0.416
T-M SmallCap Adm. $0.107
Total Int’l Stock ETF $0.537
Total Int’l Stock Index $0.170
Total Int’l Stock Index Adm. $0.288
Total Stock Index Adm. $0.228
Total Stock Market ETF $0.469
Total Stock Market Index $0.216
Total World Stock ETF $0.466
Total World Stock Index $0.182
Utilities ETF $0.834
Utilities Index Adm. $0.419
Value ETF $0.484
Value Index $0.178
Value Index Adm. $0.188
Wellesley Income $0.187
Wellesley Income Adm. $0.465
Wellington $0.253
Wellington Adm. $0.454
Windsor $0.152
Windsor Adm. $0.543
Windsor II $0.387
Windsor II Adm. $0.712
World ex-U.S. ETF $0.530
World ex-U.S. Index $0.203
World ex-U.S. Index Adm. $0.330
World ex-U.S. SmallCap ETF $0.796
World ex-U.S. SmallCap Index $0.289
JUNE SPECIAL DISTRIBUTIONS