Triston Martin
Sep 29, 2022
An international index fund is a money market fund or mutual fund that invests in stocks and other securities from companies worldwide. Such funds typically invest in at least 70% of their holdings in foreign stocks and may also include some investments in American stocks.
International Index Funds are financial products that invest in the stocks of many companies worldwide.
These funds, also known as "Smart Beta" funds, have become increasingly popular over the last few years. Smart Beta is less risky than traditional active stock managers because they hold many more stocks at once.
They try to find companies with a weaker correlation to each other than those of an actively managed fund since their goal is to outperform their competitors in their respective areas while minimizing risk. This is measured by the Beta and Alpha of the fund, which is how well they perform versus their benchmark.
Indexed investing is a way to invest in a market at a low cost to benefit from the long-term growth of that market.
In other words, you're trying to make more money on each dollar you invested rather than trying to beat the market.
Usually, when people invest in an index fund, they're looking for capital appreciation and dividends (a share of profits paid by these companies) as opposed to trying to "game" the market by buying stocks with good short-term momentum that they think will rise further over time (a risky strategy).
A good way to show why these funds are a good idea is to compare them to actively managed mutual funds. Unfortunately, most active stock managers don't do a better job than the market as a whole.
This is because they only invest in stocks that they think will outperform the market, which ends up excluding those that will outperform it. These smart beta investment strategies try to avoid this correlation and find undervalued stocks.
The benefit of this approach is that if you're wrong, all of the other stocks hold your portfolio together and compensate for your mistake.
For example, if you buy some stocks that do well but hurt the overall market (through negative beta or alpha), the other stocks in your portfolio act as a cushion to absorb losses.
Here are 5 good examples of international index funds.
The Vanguard Total Stock Market Index fund is one of many mutual funds offered by this company that invests exclusively in U.S. stocks.
This type of fund generally pays off well over the long term, and is also a good option for fixed-income investors who can’t take any direct risk in their investments.
This is another Fidelity fund that focuses on international stocks and bonds. The Fidelity International Index Fund invests in roughly 2,100 stocks, but also includes a significant amount of international bonds as well.
Like the T. Rowe Price fund, this is an excellent choice for investors who want to invest overseas with a minimum of fuss and risk.
The Vanguard Emerging Markets Stock Index fund is another great option for fixed-income investors interested in investing in the international market.
This fund focuses on investing in companies from around the world, but it does not invest in any stocks from China or Taiwan. The Vanguard Emerging Markets Stock Index Fund invests in roughly 300 foreign stocks.
The iShares S&''P Global 100 Index Fund is a mutual fund that invests in foreign stocks and American stocks that are located outside of North America, Europe and Japan.
The fund's investment objective is to provide investors with a reasonable amount of income, capital growth and an excellent return on their investment over the long term.
The fund tracks the performance of the MSCI International Index, an index consisting of 100 companies from developed markets outside North America, Europe and Japan including Australia, Brazil, Canada, France, Hong Kong Ireland Italy Netherlands New Zealand South Africa and Taiwan.
The iShares S&''P Global 100 Index Fund has a yield of 1.31% as of October 31, 2014, and has an expense ratio of 0.73%. The fund's year to date return is 6.10% with a three-year annualized return of 11.06%.
However, the fund's three-year annualized return is approximately 4%, which means it has outperformed its benchmark index by over 90 basis points in that time period from the end of 2008 through September 30th, 2014.
The fund is considered an international equity fund, and it is designed for long-term growth for taxable accounts and moderate to long-term growth with income for retirement accounts. It has a minimum initial investment of $3,000.
The T. Rowe Price International Stock Index Fund is a mutual fund that invests in foreign and American stocks located outside of the United States.
The fund's investment objective is to provide investors with a reasonable income and capital growth over the long term.
The fund tracks the performance of the MSCI EAFE Index. This index consists of stocks from 23 developed markets located outside North America, Europe, and Japan, including Australia, Brazil, Canada, France, Hong Kong, Ireland, Italy, Netherlands, New Zealand, and South Africa. The index consists mainly of companies from developed markets outside North America and Japan, such as Europe and Asia.
The T. Rowe Price International Stock Index Fund has a yield of 1.98% as of October 31, 2014, and has an expense ratio of 0.71%. The fund's year-to-date return is 5.42%.
However, the fund's three-year annualized return is approximately 7.03%, which means it has outperformed its benchmark index in tperiodriod by over 70 basis points and its peers by over 400 basis points from the end of 2008 through September 30th, 2014.
The fund is considered an international equity fund and it is designed for long-term growth for taxable accounts and moderate to long-term growth with income for retirement accounts. It has a minimum initial investment of $10,000.
International index funds are a great way to invest in the global market. They provide diversification and stability, and they have low fees. If you're looking for an investment that will give you exposure to a variety of countries, international index funds are a good option.
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