A quick scan of American investors shows that U.S. equities make up roughly 75% of their equity portfolios¹,  whereas the U.S. represents only 53% of the world’s stock investments².

Why the reluctance to invest overseas? Our analysts review three common misconceptions – and offer ways to overcome them:

A preference to ‘buy American’: Many American investors have “country bias” and gravitate toward buying U.S. stocks because they represent names they’re familiar with. “Everyone knows Microsoft, or Amazon, or any of the company names in the S&P 500®.  But they’re not as familiar or comfortable with some of the European companies that may not have products in the U.S. or don’t actively market over here,” says Boston Private analyst Paul Fortin. 

The solution: Think beyond our borders.  When you limit your opportunities to the U.S. exclusively you ignore familiar foreign-owned companies including Samsung, UBS, and ING. Or some not-so-household names such as ABB Ltd. (Switzerland), Baidu Inc. (China), and Telefonica Brasil SA (Brazil) that may deliver potential growth. 

Focusing on recent U.S. performance: “U.S. companies have done well recently, so there hasn’t been a perceived need to invest internationally,” says senior analyst Nicole Coombes. 

The solution: Be prepared for when U.S. performance lags. As investment cycles change and U.S. stocks slow down, having an allocation to international investments can fill the gap.

Assumed investing complexity: Even though there is far more information available today than in the past about the foreign companies issuing the stocks, international investing still involves more intricacies and nuances than investing in the U.S. “There are more factors to consider, like geopolitical risk, international regulations, different legal structures, and the impact of changes in currency values,” Coombes explains. 

The solution: Invest in international stock funds, rather than individual securities, to avoid worrying about investment complexity. And seek out experienced international fund managers with a consistent track record. “At Boston Private, we do our homework when we recommend international funds for our client portfolios. We’re looking for fund managers who regularly travel to the companies they invest in and who do the active, bottom-up research,” says Coombes. 

How Boston Private can help