Weekly Wrap: Crypto Terms, Inflation Hedges, and Foreign-Stock Fund Picks
We recap the week on Morningstar.com and note the most popular stocks, funds, and exchange-traded funds.
Investing Specialists
| Editor's note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it. |
The Tokyo Olympics brought together athletes--and viewers--from around the world. And while we certainly cheered on the members of Team USA, we also celebrated athletes from other countries: Japan’s Momiji Nishiya, for instance, for earning the gold medal in the skateboarding street event at just 13 years old; Tunisia’s Ahmed Hafnaoui winning the 400-meter freestyle after barely qualifying for the event; and weightlifter Hidilyn Diaz securing the first gold medal ever at an Olympics for the Philippines.
As the Olympics wind down, it seems like a good time to discuss investing globally.
There are plenty of reasons to own international stocks in a portfolio. Some investors want foreign stocks in their portfolios to round out their exposure to the global stock market. Others may want to tilt their portfolios toward foreign fare after a period of U.S. stock dominance, such as we've seen during the past several years. At 2021's midpoint, the average U.S. large-blend fund had trounced the average foreign large-blend fund by more than 8 full percentage points annually over the trailing three-year period.
The easiest way to add some foreign exposure to your portfolio is through a fund. Before adding an international fund to your portfolio mix, though, double-check that you don’t already have plenty of exposure to international markets. If you find you are, in fact, lighter in foreign-stock exposure than you’d like, you can turn to our shortlist of the best foreign-stock mutual funds and ETFs.
Others, however, may want to tap into foreign-stock opportunities by purchasing individual stocks. Investing in non-U.S. stocks doesn't have to be unnecessarily daunting. In fact, our recipe for smart investing applies around the globe. First, favor companies with durable competitive advantages, or economic moats. These companies should be able to fend off competition and outearn their costs of capital for years to come. Then, buy these companies when they're trading below what they're worth.
You can find a good list of high-quality ideas to investigate further in the Morningstar Global Markets ex-U.S. Moat Focus Index. We recently spotlighted some of the most undervalued names that were added to the index this summer. Moreover, the regulatory crackdown in China has left several high-quality China-based companies significantly undervalued. (Esteemed investor Martin Lau discusses what to make of the Chinese government’s market intervention in this week’s episode of The Long View podcast, too.)
Stamp your passport!
Editor's Picks
A Basic Glossary of Terms for Crypto Newbies
Crypto can be incredibly complicated, but understanding the basic terminology is a good place to start.
The Best Foreign-Stock Funds
These international mutual funds and ETFs all earn Morningstar Analyst Ratings of Gold.
Your Financial To-Do List for August
Slow summer days are an ideal time to review, or create, your estate plans.
Corporate Tax Hike
David Harrell lays out what a higher corporate tax rate could mean for dividend investors.
How the Robinhood Era Is Changing Stock-Market Investing
When investor communities, not institutions, drive security pricing.
How to Hedge Against Inflation
Morningstar FundInvestor editor Russ Kinnel describes some direct and indirect hedges for inflation protection.
Portfolio Planning and Personal Finance With Christine Benz
Must-Knows About ESOPs
These plans are often touted as a way to align employees' incentives with their employers', but the risks can be significant.
An Action Plan for Long-Term Care
Many people put off creating a long-term-care plan. This step-by-step guide can help you get over inertia, dread, or both.
Mutual Funds and Exchange-Traded Funds
Private Equity and Target-Date Funds: An Unrequited Love Story
Private equity managers long for target-date funds, but the asset class' high fees and operational challenges keep it in the friend zone.
Emerging Markets Are on the Rebound
But beware of style differences in this broad Morningstar Category.
Indexing and Luck
It's important to understand how your fund's benchmark rebalances.
ETFs Set Annual Flows Record--in July
ETF flows cruise past the 2020 record just seven months into the year.
Stocks
VMware Goes Beyond Virtualization for Growth
Independence from Dell is a good thing for this underappreciated tech firm.
4 Very Undervalued Wide-Moat China Stocks
A regulatory crackdown has left some big names at cheap prices.
Stock Analyst Updates
Square to Buy Afterpay So It Doesn't Pay Later
We believe the transaction has a high chance of succeeding.
CVS Health Has Q2 That Beats Expectations
However, investors may be disappointed that CVS backed off its 2022 goal of double-digit earnings growth.
GM's Q2 Did Not Deserve the Stock Sell-Off It Triggered
We are leaving our fair value estimate in place because we see GM’s aggressive investment in an electric and autonomous future as more important than its 2021 results.
Uber’s Q2 Results Beat Expectations
We are slightly increasing our fair value estimate and view the stock as attractive.
Fastly’s Q2 Suffers From Network Outage
Underlying metrics showed worrisome deterioration, and the firm reduced 2021 sales and earnings guidance significantly
Roku Posts Strong Q2; Growth Appears to Be Slowing Down
We don’t expect to materially change our $170 fair value estimate and we view the shares as materially overvalued.
What Biden's Executive Order Means for EVs
Biden's plans are in line with our thesis for higher U.S. and global electric vehicle adoption.
Murky Conditions for Kellogg But Has Solid Foundation
Our $83 fair value estimate is unchanged.
Rekenthaler Report
For Retirees, Buying and Holding Bonds Isn’t So Simple
The investment math is surprisingly messy.
Advisor Insights
Integrating Sustainable Investing: Strategies for Transitioning a Portfolio
Here are several approaches, with an eye toward optimizing ESG outcomes and minimizing tax consequences.
Why We Experience Regret Over Savings--and What We Can Do About It
It’s not about preventing regret but learning to reframe it.
The Long View Podcast
Martin Lau: Now Is a Better Time to Buy China
An esteemed investor in Asian equities discusses what to make of the Chinese government's market recent interventions and whether China's sell-off represents a buying opportunity.
The Short Answer
Do You Need a Side Hustle?
What should you consider before picking up an extra job.
What Is Direct Indexing?
We take a look at the pros and cons of this investing strategy.
Commentary
Real Financial Planning Is Closing the Gap Between Values and Actions
Financial advisor and columnist Carl Richards explains 'real' financial advice and how to articulate a statement of purpose.
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