Investing Outside the U.S.

Opportunities in overseas markets can be yours with the guidance of our expert panel of money managers

region. Also, the ASA Limited Fund (ASA) is an exchange-traded fund that can be found at www.ETFconnect.com. It provides exposure to businesses in South Africa that have gold mining and related activities as a major portion of their business.

BE: What other areas around the globe are hot?

RAMOS: Europe will do well. They’re doing a good job of increasing productivity. Their real estate markets have done extremely well, just like the U.S. They are not nearly as indebted as U.S. consumers are, with the exception of the U.K., but the U.K. economy is growing much faster than the U.S.

It’s been a long time coming, but they’ve implemented labor market reforms. Recently, Germany increased the work week from 35 to 40 hours. This hasn’t happened in 45 years. The fact that it started in Germany is very good, and hopefully it will start happening in France because that will lead to further productivity gains.

Japan is another place that is very slow about making necessary structural reforms. But it seems like some things they’re doing are starting to kick in. However, you’re not finding a lot of companies trading at reasonable prices in Japan. And Japan has long-term issues–primarily demographics. They’re going to have to seriously address increasing the working-age population and increasing the global competitiveness of their companies.

China is having an incredible impact on global economics. When you’ve got an economy that is growing at 9%, it seems like anything you throw money at is going to grow. There was over $100 billion in foreign direct investment in Shanghai last year–that’s more for that one city than the entire country of India. That’s going to continue, and the government is doing the appropriate thing in trying to slow down the economy. But, at the same time, they have to grow their economy at least 7% a year just to create enough jobs for the number of people who are entering the workforce. So, it’s a fine balance.

If you have a longer-term view, you can find very attractive companies in China. It’s probably the greatest investment for the next generation, looking out 20 to 25 years. You have to be concerned about government intervention, but that’s something that you always have to look out for. And, in the near term, there’s certainly a risk of a slowdown. But longer term, it’s one of the best investment stories out there.

HOLT: I’m a value investor, so some of the places that we are looking for opportunities aren’t doing so great right now. One of those is Europe. In terms of stock performance, Europe has done reasonably well, but economically has been lagging behind the rest of the world. However, when you look at valuations [of companies] in places like Germany, France, and some of the industrial heart of Europe, they are still attractive. These are cash-rich companies that are paying barely significant dividends, which helps the total return for investors. So Europe is a place that we continue to like.

A market that hasn’t done

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