How to invest outside your home market
Your home market is one country's worth of the world's companies. Owning only it is a bet you never consciously placed.
Own the world without stepping on the obvious mines.
How to invest outside your home market works, in one picture
The same argument as the text, as a chain. Each step is what makes the next one possible.
The fee you never see
You buy at the ask and sell at the bid, so you are down the spread the instant you trade. In an illiquid stock it dwarfs any commission you thought you were avoiding.
- 1
Name the bet you are already making
Most investors hold overwhelmingly domestic portfolios. If you are British, you are betting on a market that is roughly 4% of global equity value, concentrated in oil, banks and pharma. That is a very specific bet, and almost nobody chose it deliberately.
- 2
Accept that you are buying a currency too
A foreign share can rise 15% in its home market while you lose money, because the currency moved against you. Over decades this mostly washes out. Over your actual holding period it may not, and nobody warned you that you had taken an FX position.
- 3
Check the disclosure regime before the company
Accounting standards, audit quality and enforcement vary enormously. The same word on two income statements does not always mean the same thing. Where we can, SteadyShares pulls US fundamentals directly from SEC filings; outside the US, coverage from data vendors is thinner and you should expect to go to the primary filings yourself.
Be honest about this rather than trusting a tidy number. A confident figure from a thin source is worse than no figure.
- 4
Check you can get out
Liquidity vanishes exactly when you need it. In a thinly traded foreign small cap the bid-ask spread alone can exceed a year of expected return, and in a panic there may be no bid at all.
- 5
Then go and look
MarketsSteadyShares covers over 1,100 companies across 17 exchanges, including the JSE, HKEX, the LSE, the TSX, the ASX, and the Indian and Japanese markets, with the same moat, valuation and peer tooling applied to all of them.
You can state what percentage of global equity value your portfolio actually ignores.
Read next
Your home market is one country's worth of the world's companies. Owning only it is a bet you never consciously placed.
Screens for the UK, the JSE, Japan, India, China and Hong Kong, each with the local risk that actually drives it.