Why Investors Love International Stocks

Investors are taking pleasure from a bull market in stocks, and not just the one taking US blue chips to record after record recently. As the Dow Jones industrial average on November 16 made its 16th record high close since October 1, the MSCI All-Country World Index also touched its latest life-time high on the same day and caught the eye of the US hedge funds and other institutional investors.

According to Hedgefund.net, the total assets in hedge funds investing mainly in European markets rose an estimated 7.07% in the third quarter or $16.3bn including $12bn in new assets, to $247.34bn. Good returns have been the main attraction for hedge funds. To date this year, the Morgan Stanley Capital International All Country World Index comprising 48 global developed and emerging markets indices is up about 15%. The index�s average one-year returns are 20.1% whereas its cumulative returns for the two years ending November 15 are 30.14%.

According to Robert Adler, president of AMG Data Services, the markets are seeing the highest percentage of international securities holdings by domestic mutual funds and on record. Of the $5 trillion in equities involved in investing in equity funds, 17% sit in funds holding foreign equities. Adler said, �Investors see value in non-domestic regions especially with the dollar falling.�

The dollar has fallen 7.5% against the euro to date in 2006 which boosts European stocks since foreign companies get more greenbacks for the foreign currencies and more dollars mean more earnings. According to Virginie Maisonneuve, head of equity investments for Europe, Australia and the Far East at Schroders Investment Management, improving economies abroad have fueled the strength in corporate profits and operating margins. For example, the eurozone economy extended its strongest economic upswing since the turn of the century in the third quarter, reaching a rate of 2.6%. Virginie said her preferred stocks at present sport earnings-per-share growth approaching 20% and have a competitive edge in their respective industries.