For American investors, looking outside the domestic market can open doors to companies and opportunities they simply can’t find at home. Whether it’s European luxury brands, Asian technology giants or high-growth companies in emerging markets, international equities offer a way to diversify and broaden your portfolio.
International exposure can also help balance risk. If the US economy slows, other regions may outperform, helping to smooth returns. What’s more, international investing allows you to take advantage of currency fluctuations and enter sectors where non-American companies dominate.
And the best part? It’s easier than ever to trade international securities. Between ADRs, ETFs and even direct access to foreign exchanges via modern brokers, you have multiple ways to participate. Here are five steps to help you understand the basics, explore your options and follow along with TIKR.
Step 1: Understanding international investment options
There are several ways to buy international securities, each with its own advantages and disadvantages in terms of simplicity, cost and access.
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- American Depositary Receipts (ADRs): ADRs are U.S.-listed securities representing shares in a foreign company, making it easy to buy global brands such as Toyota, Nestlé or Alibaba. They are traded in U.S. dollars, settled on U.S. systems and often carry the same information as U.S. stocks, simplifying research and reporting. For many investors, ADRs are the first and most convenient step towards global investment.
TIKR tip: search for ADR tickers on TIKR to see valuations and analyst forecasts in US dollars. - ETFsandglobal mutual funds: ETFs such as iShares MSCI EAFE (Europe, Australia and the Far East) or emerging markets funds offer pooled exposure to dozens of international companies. They allow you to spread your risk over a large number of stocks, which is useful if you want exposure to a region, but don’t know which company to choose. Mutual funds come with professional management, but their fees are often higher than those of ETFs.
- Direct trading on foreign stock exchanges: some intermediaries allow direct trading on stock exchanges such as the London Stock Exchange or the Tokyo Stock Exchange. This gives you access to companies that don’t issue ADRs, but requires currency conversion and sometimes additional paperwork. Direct ownership also means you’ll need to understand foreign trading hours and settlement processes.
- Over-the-counter(OTC) listings: many international companies trade in the USA via OTC markets. These markets provide access to lesser-known companies, but liquidity is often lower and bid-ask spreads can be wider, making transactions more expensive. These markets may also be accompanied by less frequent reporting, so it’s essential to do your research before you buy.
By evaluating these options, you can decide whether to start simply with ADRs or ETFs, or to move into direct international trading. Once you know what instruments are available, the next step is to understand why adding international equities can strengthen your portfolio.
Step 2: Why is international action worth considering?
Adding international exposure isn’t just a matter of variety; it can make your portfolio stronger and more balanced.
- Different economic cycles: economies don’t grow and collapse at the same time. For example, when the United States slows down, Asia or Latin America may continue to grow, offsetting returns. This out-of-sync behavior helps to smooth global performance.
- Diversification: US markets are powerful but cyclical. By investing in equities from other regions, you spread risk across several economies and reduce your dependence on US performance. This can help protect your portfolio if domestic markets underperform.
- Unique growth stories: International markets are home to leading companies in sectors not dominated by the USA. These include Samsung in semiconductors, ASML in chip manufacturing equipment and MercadoLibre in e-commerce. These stocks offer investors exposure to different centers of innovation around the world.
- Currency exposure: while a strong dollar can reduce returns, a weak dollar can increase them. For investors, this adds an extra level of diversification, as global currencies don’t all move at the same time.
TIKR tip: compare TIKR’s regional ETFs with the S&P 500 to see how global markets move differently.
These strengths make international markets an attractive complement to U.S. investments. Knowing the advantages is one thing, but the next step is knowing what to look for when choosing international companies.
Step 3: What to look for in international equities
The criteria for selecting strong companies abroad are similar to those in the U.S., but some additional factors come into play.
- Liquidity: large international companies tend to trade easily, which is not always the case for smaller companies listed on OTC markets. Low liquidity can make it difficult to enter or exit a position at a fair price, so this factor is important when choosing where to invest.
- Corporate transparency: not all markets have strict disclosure standards, so corporate governance is essential. Look for companies that communicate consistently, whose financial statements are audited and who communicate well with investors. This reduces surprises and improves confidence in reported results.
- Country and currency risk: political changes, inflation spikes or government instability can generate volatility in certain regions. Currency fluctuations can add another layer of unpredictability. Understanding the economic and political context helps investors assess the real risks associated with equities.
- Industry leadership: companies such as TSMC in semiconductors or LVMH in luxury goods dominate their sectors. Market leaders often have pricing power, global reach and adaptability, making them safer bets for international investment.
TIKR tip: Use TIKR’s benchmarking tool to compare global leaders with their U.S. competitors. - Dividends: many foreign companies, particularly in Europe, have a strong dividend record. These payments can offset currency volatility and provide regular income, making them attractive to long-term investors.
By paying attention to these factors, you can tailor international investments to your risk tolerance and long-term strategy. Once you’ve defined your criteria, the next step is to decide how to put them into practice.
Stage 4: Introduction to international trade
Once you’re ready to take the plunge, here are a few practical tips to get you started.
- Choose a broker with global access: some brokers, such as Interactive Brokers, offer direct access to foreign markets. This provides access to a full range of companies not available through ADRs or ETFs. Be prepared for additional tax documentation and monitor foreign trading hours.
TIKR tip: Follow fund profiles on TIKR to review holdings and regional exposure before buying. - Start with small positions: international investing presents unique variables, such as currency fluctuations and different settlement rules. By starting with small positions, you can familiarize yourself with how costs, timing and volatility work before scaling up. This approach reduces risk while you learn the mechanics.
- Start with ADRs: ADRs are the simplest entry point. They are traded in US dollars on US exchanges and are governed by familiar disclosure rules. For beginners, they eliminate most of the complications associated with investing abroad, while offering global exposure.
- Use global ETFs: ETFs are a low-cost way of gaining international exposure across regions or themes. They are cost-effective, widely available and reduce single-company risk. If you are unfamiliar with international investing, they can serve as a basis for exploring individual stocks.
Each of these approaches offers different access to global markets, from simple ADR to more advanced direct trading. With these tools in mind, the final step is to learn how to use TIKR to keep everything organized and usable.
Step 5: Use TIKR to track and research global equities
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Researching and tracking international titles can be overwhelming, but TIKR helps make it manageable.
- Follow global news: Use TIKR’s News tab to track real-time regulatory updates, geopolitical developments and corporate announcements. Staying informed allows you to react faster when global headlines affect your positions.
- Search for ADRs and direct shares: whether you want to analyze Alibaba’s ADR in New York or its main listing in Hong Kong, TIKR provides data for both. This flexibility helps you choose the version that best suits your portfolio.
- Create watch lists by region or sector: organize your portfolio by geographical area or theme. For example, create a list of “European industrial companies” or “Asian technologies” to compare the performance and growth of different categories.
- Tracking currency effects: TIKR’s overlay charts allow you to link share performance to currency movements. This allows you to determine whether company performance or exchange rate movements are driving performance.
- Examine analyst forecasts: consensus estimates of revenues and earnings per share in TIKR make it easier to understand global corporate expectations. This is particularly useful in markets where analyst coverage can be scarce.
- TIKR tip: Create an “international” watch list in TIKR to jointly monitor your global holdings.
Using TIKR’s features to track performance, valuations and global news gives you an edge in navigating international markets. With this structure, you’ll be better equipped to build and manage a portfolio that extends beyond the United States.
International share trading made easier
International equities are more accessible than ever to U.S. investors. Whether you start with ADRs, add an ETF for broader exposure, or end up trading directly on foreign exchanges, international investing can help you diversify your portfolio and offer unique opportunities.
There’s no need to jump right in; starting small and learning the mechanics is a smart way forward. With TIKR, you can centralize your research, compare your peers in different markets and keep abreast of financial data and headlines. If you do it right, international investing can become a natural extension of your overall strategy.
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Disclaimer :
Please note that TIKR articles are not financial or investment advice from TIKR or its content team, nor are they recommendations to buy or sell stocks. We create our content based on TIKR Terminal investment data and analyst estimates. Our analysis may not include recent company news or important updates. TIKR does not hold a position in any of the stocks mentioned. Thank you for reading and happy investing!
