Are there index funds for foreign stock markets?
The firm of Morgan-Stanley tracks the value of all stock markets in the world. According to Morgan-Stanley, as of 3/31/02, the U.S. stock market represents about 58% of the world’s stock market value, the European stock market is 26%, the Pacific stock market is 10%, and the remaining 6% is emerging markets or other. Check Morgan-Stanley’s web site for updated data on how the world’s stock markets are divided since the percentages change each year due to changes in relative values of world markets. Many studies have shown that investing in stock markets outside of your home country has the potential to lower the over-all risk of your stock portfolio and increase your returns. Owning stocks from other countries adds diversification to your stock portfolio because the stock markets of some countries may be going up in value while other countries may be seeing their stock markets decline in value. Investing in the stocks of other countries adds some new types of risks as compared to only
