LAT: Shift to Foreign Stocks Sapping the Dollar

[DeepModem Mom]

Shift to Foreign Stocks Sapping the Dollar
A weaker greenback is exactly what many U.S. investors are betting on. As it slides, the value of overseas funds rises.

By Tom Petruno, Times Staff Writer


Already depressed by the nation's huge budget and trade deficits, the U.S. dollar is being undermined by American mutual fund investors: More of them are funneling money into foreign stock funds, a shift that hurts the greenback.

Thanks in large part to the dollar's weakness, returns on foreign shares overall have significantly outpaced U.S. market returns since 2002. Foreign stock mutual funds have gained 12% a year, on average, over the last three years, compared with a 4.9% average annual gain for domestic stock funds, according to Morningstar Inc.

That performance edge is proving a big draw for American investors this year.

Net U.S. cash inflows to stock funds that invest overseas soared to a record $79.7 billion in the first 10 months, compared with $47.6 billion for all of 2003, according to estimates from fund tracker Financial Research Corp. in Boston....

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But a weaker dollar is exactly what many investors are betting on. As its value slides, foreign securities can automatically be worth more to U.S. investors....


http://www.latimes.com/business/la-fi-foreign20dec20,0,1745337.story?coll=la-home-business

[Kolesar]

1. I have been shifting to international funds

I already had about 7% of my money in FDIVX. In Nov, I started shifting my 401k to the one international fund that is available.

[spotbird]

2. We now have an international bond fund

as well as equities, I'm not sure whether to put money in there also.

[Kolesar]

4. The US could drag down the whole world's economy

The huge budget deficit will likely cause a currency crisis. The "adjustment period" will manifest itself as a world wide recession. I cannot say I understand it thoroughly.

[Divernan]

3. Reminds me of an old joke.

Your investment symbol, FDIVX, reminds me of one of my dad's favorite jokes.
(Read the letters out loud)

FUNEX?

SVFX

FUNEM?

SVFM

OK,MNX

[tsuki]

5. Oh boy, let's give them our Social Security money so the dollar will

slide further.