Page 65 - The Peorian Vol 3 Issue 1 Winter

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3) If you have missed the rise
in U.S. stocks thus far, you may
have a second chance by looking
into international and emerg-
ing market stocks: International
Blue Chips as measured by the
EAFE index is up only half as
much as our S&P 500 index over
the last two years, as of third
quarter 2013. And the MSCI
emerging markets index is about
the same value it was two years
ago, despite earnings growth.
More positively, their P/E ratios
and other measures of value are
trading at discounted levels when
compared to historical levels.
All indices aforementioned
are unmanaged and cannot be
invested into directly. They do
not reflect the fees, expenses, or
sales charges inherent to invest-
ing. Index performance is not
based on the performance of any
specific investment. As always,
you cannot base future results on
past performance.
4) By investing globally you
have the potential for higher
income streams. Not all countries
have low interest rates, provid-
ing the potential to increase
yield without a less-than- equal
increase in risk. Investing in
international and emerging
markets involves special risks
such as currency fluctuations and
political instability and may not
be suitable for all investors.
Another positive is the diver-
sification of having bonds in
more than one country across
the globe. Further diversifica-
tion comes in the use of different
currencies to own these bonds.
Be aware that if the dollar rises
relative to other country curren-
cies this may reduce your return,
so if that is a concern you may
want to consider going with a
manager that hedges against U.S.
dollar strength. That is also true
for international equity investors.
There’s no guarantee that diver-
sification will enhance returns
or outperform a non-diversified
portfolio and it does not protect
against market risk.
The senior loan market, other-
wise known as the floating-rate
market, features a variable inter-
est rate that is tied to a market
reference rate and adjusted
periodically. This could be attrac-
tive in a rising rate environment
because they minimize exposure
to interest rate risk. Other risks
involving senior loan investing
include market, below invest-
ment grade securities, default,
and credit risk. There is no orga-
nized exchange for trading and
reliable market quotations may
not be readily available. As with
all asset class choices, it is imper-
ative an investor understands the
different ways to invest within
those asset classes, as well as the
downside risks. Asset allocation
does not ensure a profit or protect
against a loss.
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