International ETFs Surge in Popularity After Strong Returns
Investor interest in international funds has tempered slightly, but that hasn't altered the picture for international ETFs. Over the past year, these funds have become huge.</br></br>Exchange-traded funds, index-tracking mutual funds which trade on an exchange like a stock, have been raking in cash -- and internationally oriented ETFs have grown even faster than their domestic counterparts.</br></br>According to the Investment Company Institute, total ETF assets rose 38% to $335.1 billion in the past 12 months. In the same time, global ETFs nearly doubled to $82.8 billion. (The funds reached their peak of $88.9 billion in April, before emerging markets slumped.)</br></br>Both mutual funds and ETFs are popular with investors seeking to put money abroad because differences of language, currency and reporting all make picking individual stocks tricky. Many financial advisers say investors should have some portion, often as much as 20%, of their savings invested in foreign companies. Because foreign stocks tend to rise and fall at different times than U.S. stocks, overseas exposure can even out stock-market swings.</br></br>Of course, the fact that international funds have posted strong returns over the past several years hasn't hurt their popularity either. "Investors gravitate to markets that perform well," says J.D. Steinhilber, founder of AgileInvesting.com, an investment-advisory service. "International markets became cheap relative to U.S. markets" several years ago, he adds, although recent gains have closed the gap.