This paper describes three major existing methods of investing in international equity markets. They include bottom-up stock picking, “hybrid” stock picking, and investing in funds or Exchange Traded Funds (ETFs) that closely follow broad-based international indices. The paper also describes the fourth, alternative, method of international equity investing, namely, construction of portfolios from single-country equity ETFs that was developed at Beyond Borders Investment Strategies, LLC. It explains the firm’s reasoning for developing this new method. The paper proceeds to compare selection of different ships for fishing with investment portfolios built using the four methods above. The paper describes groups of countries that each investment method is more appropriate for. Finally, it talks about competitive advantages of building portfolios from single-country ETFs versus the three major established methods in such areas as potential reduction of risk of capital loss, flexibility of investment selection, speed of entering & exiting investment positions, and investment management fees.
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