Although Canadian corporate earning...

Although Canadian corporate earnings are likely to rise at about 20% in 1993 and 15% in 1994 many portfolios could benefit from international diversification. However, for the individual investor, the "whys" and "hows" of foreign investment may not be immediately evident. greatest in number personal portfolios hold only a dozen, or at greatest in number 20, stocks out of the very large domestic universe of publicly listed companies. With in such a manner much to chose from here at hearthstone you may well ask wherefore you should look outside Canada. There are several dutiful reasons.

First, investing in companies that operate in a different economic environment (i.e. outside Canada) adds a measure of diversity to your investments. When Canada isn't doing well, other economies might be booming.

A next to the first reason to invest outside Canada is that about kinds of stocks, for example big pharmaceutical manufacturers or large chemical corporations, are not available in Canada. If you want prospect to such industries, you must proceed outside.

Another motivation for international diversification is the possible in all senses to the "emerging" markets of one newly industrialized nations. Because these countries are oftentimes at an earlier, more rapid stage of progressive growth investing in their companies can move both good value and great excitement.

In a long-term produce portfolio (not constrained to 18% nonCanadian holdings according to the RRSP tax regulations), it is rational to consider investing one-third in Canada, one-third in the U and one-third outside North America.

Once you have decided to invest outside Canada, there are several alternatives:

INVEST DIRECTLY IN FOREIGN STOCKS

You might begin your search for foreign stocks from reading an international paper like the Financial Times of London (the weekend edition is probably enough to start). Many of the corporate names will be familiar. Nearly everyone has had Nescafe (Nestle) or Lipton's Tea (Unilever), taken an Aspirin (Bayer), or used Shell gasoline (Royal Dutch/Shell).

You'll find that many large foreign companies are traded in novel York, most often in the form of American Depository Receipts (ADRs). And all of their financial reports are published in English translations. equable if ADRs are not available, chiefly of these companies are pleased to send out their financial reports if you desire them. Most public libraries can provide addresses and phone numbers and, in many cases, your avow full service broker can help.

The Metropolitan Toronto intimation Library on Yonge Street has integral financial data on compact disk for more than 10000 corporations worldwide. With like information, your Stock Selection Guide will work just as well for foreign companies as it does for North American stocks.

GLOBAL MUTUAL FUNDS

For those who be impressed uncomfortable picking their own foreign stocks, a growing number of mutual foundations offer global asset management. an of these are traditional load capitals but the number of off-shore, no-load stocks (with neither a sales nor a redemption fee) is growing quickly. do not include for their emphasis on foreign assets, these stocks offer all the features of regular mutual foundations There are funds that specialize in emerging markets, particularly Southeast Asia, as well as more broadly based global funds

MULTINATIONAL CORPORATIONS

Another way of exposing your portfolio to international markets is to invest in multinational corporations domiciled in Canada or the U For example, one as well as the other Minnesota Mining and Manufacturing (of "Scotch" tape fame) and Johnson & Johnson ("Band Aids") derive about half of their sales and profits from outside North America. These and other multinational household names can easily be followed, since greatest in quantity Canadian and American brokers contribute information on them. Some companies in this category include Seagram's, Moore Corp., and mining firms like Inco Ltd Although many of Inco's mines are domestic, the company is firmly tied to international markets. This is because export prices for its returnss are set globally and denominated in U dollars. onward the other hand, most European and Japanese multinationals like BMW Mitsubishi, and Philips also maintain exposing to our North American economies because they exchange many of their products here.

COUNTRY FUNDS

There is undivided remaining category of investments which falls in between the hands-on picking of individual companies and the passive convenience of a mutual store Country funds are holding companies that originally issued shares to raise their start-up cash and now actively manage that coin by investing in a prescribed geographic area. These stores are closed-end trusts. While they be like mutual funds, they do not regularly issue recently made known units nor redeem units at their asset value. Instead, shares of political division funds trade on an exchange like other shares.

The day-to-day investment management of these supplys is most often provided on a group with expertise in the specific geographical division such as a local bank or investment advisor. These managers, in cast are overseen by an American or Canadian investment manager. land fund shares--most commonly listed in novel York, with a few upon our Toronto Stock Exchange--tend to fluctuate around the market value of their underlying assets. yet large discounts or premiums to unadulterated asset value do occur as investors change their perception about the attractiveness of investing in that particular country