Country singer Johnny Lee might have looked for love in all the wrong places, but our cover story this month reveals some of the right places to look for growth. The article is based on an interview that didn’t go quite as we expected it to.

Cynthia McLaughlin and I started the conversation with Wellington Management’s Michael Masdea expecting to focus on the concept of diversifying internationally. Though global allocation was an underlying theme, we spent quite a bit of time talking about growth investing. The change led to what we think is an even better article.

Masdea is a subadviser to the Vanguard Global Equity fund (VHGEX). He is involved in managing the growth portion of the fund. Vanguard Global Equity combines both growth and value strategies. Its portfolio spans the world, with top holdings that include well-known growth stocks like Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN).

Though these are decidedly U.S. corporations with foreign operations, Masdea and his team look across the borders. During our conversation, Masdea talked about health innovations occurring in Japan and China, for instance. He also discussed how venture capital is looking globally for growth companies. Going across borders can make sense for your portfolio as well.

American depositary receipts (ADRs) of several foreign companies trade on U.S. exchanges. Diabetes drug manufacturer Novo Nordisk A/S (NVO), for example, is listed on the New York Stock Exchange (NYSE). Other foreign firms have American depositary shares (ADSs) that trade on exchanges.

Those of you who are willing to venture off the exchanges can find some other large, well-known companies. For example, Nintendo Co. Ltd. (NTDOY) has long traded on the over-the-counter (OTC) exchange. The same goes for Roche Holding AG (RHHBY) and Siemens AG (SIEGY). Just be aware that shares trading on the OTC market may not trade as frequently. Also, financial information may be presented differently; Siemens reports its results in euros while Nintendo reports in yen.

Your broker could also charge you extra for buying and selling foreign stocks, so ask first.

An example is French luxury conglomerate LVMH Moet Hennessy Louis Vuitton, whose shares I bought during the coronavirus pandemic. The company trades under two ticker symbols in the U.S. The unsponsored ADRs trade under the ticker symbol LVMUY and can generally be bought and sold without encountering commissions. These ADRs are issued by JPMorgan Chase & Co. (JPM). Shares trading under the ticker symbol LVMHF represent the Paris-listed stock and give you access to the company’s shareholder’s club. Some brokers charge a foreign stock fee for buying and selling these.

A simple way to get around these potential issues is to buy global and foreign mutual funds and exchange-traded funds (ETFs). Such funds have the additional advantage of being better able to diversify and they can invest directly in foreign markets. You will generally pay higher expenses relative to domestic funds. Plus, foreign exchange rates may work against you, so there are trade-offs. Nonetheless, it is a big world with lots of opportunities both within and outside the U.S., as Masdea explains in his article.

Two Articles for Your AAII.com Library

Also in this issue are two articles you may want to save to My Library on AAII.com.

The first is by AAII contributing editor Paul Merriman. Merriman discusses how you can increase your long-term wealth simply by keeping a lid on investment fees and expenses and by taking steps to avoid common biases and emotions. It is a great article for the next time you feel your emotions turning on or you are tempted to look at a high-cost investment. 

The second is about the timing of when to make a qualified charitable distribution (QCD). QCDs can reduce your required minimum distributions (RMDs)—and thereby your taxable income—dollar for dollar. Timing matters, however, as Brian Dobbis of asset management company Lord, Abbett & Co. explains in his article.

Wishing you prosperity and good health,