One of the only bright spots for investors during the recent financial crisis was international stocks. During the worst parts of the recession, nations like China and India were the only places to find economic growth. Investors were drawn to European companies such as Unilever (NYSE:UL), with their U.S. beating dividend yields.

As the greenback has fallen, after the initial flight to quality, assets priced in foreign currencies have flourished. All this attention has a dramatic effect on the pricing on these assets, with both the de facto international market proxies, the iShares MSCI Emerging Markets Index (NYSE:EEM) and the Vanguard Europe Pacific ETF (NYSE:VEA) handily beating the broad domestic indexes in 2009.

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Global Stocks Still Make Sense
An interconnected global economy has made it clear that every portfolio needs a dose of international companies. A global portfolio can offer diversification benefits as well as the ability to tap into faster growing economies. Over the longer term, ruling out these sort of investments could have detrimental effects to an investor's portfolio, however, in the short term many of these securities have been run up to possible bubble-like levels.

Russian steel company Mechel (NYSE:MTL) alone, was up nearly 465% in 2009. Mechel and similar companies are still great long term bets on the global economy, investors wanting to participate in these kinds of stocks may not need to wait for a broad market decline if they focus their research on the investing worlds more quirky securities.

Flying Abroad at a Discount
Wildly misunderstood, closed-end funds (CEF) may be the ticket to emerging market and international investing. As a cross between ETFs and mutual funds, closed-end funds trade on the stock market with a fixed number of shares. However, due to their nature, many times the unit's trade for discounts to their net asset values, allowing investors to pick up stocks for pennies on the dollar.

In the case of international investing there are several closed-ended funds that still trade at deep discounts to their underlying holdings and in some cases, such as with the New Ireland Fund (NYSE:IRL), are the only pure way to participate in certain areas of the world. (Learn more about closed end investments, see Open Your Eyes To Closed-End Funds).

A Few Discounted Picks
Portfolio manager Dr. Mark Mobius is considered by many to be the emerging markets guru, spending more than 30 years devoted to the sector. Of his three CEFs at Franklin Templeton, the Templeton Dragon Fund (NYSE:TDF) trades at largest discount, currently 10.48%. The fund gives access to China, Singapore and other fast growing Asian economies. An added benefit is the ability to tap into Mobius' expertise without the normal 5.75% sales loads associated with his open mutual funds.

Deutsche Bank's Central Europe & Russia Fund (NYSE:CEE) rallied nearly 122% in 2009, but still trades at 10% discount. The fund includes investments in Russia, Poland and Turkey with Russian Oil giant Gazprom as the top holding.

Investors wanting to add South America to their global portfolios have a winner with the Latin American Discovery Fund (NYSE:LDF) which has also rallied over the past year, locking in gains of over 100%. The fund trades at a 7.29% discount to its assets. The CEF is a Brazil heavy fund, with top holdings including beverage maker AMBEV (NYSE:ABV) and financial firm Itaú Unibanco (Nasdaq:ITUB), it does give some exposure to Mexico, Chile, Panama and Peru.

The Bottom Line
Emerging market and international investing is playing an ever increasing role in modern portfolio construction; however, the recent run-up in prices for these assets has taking away some of the good bargains. Investors wanting to add to their exposure in these areas may want to take a look at some closed-end funds. Several still trade at discounts to their NAVs and could offer continued upside in the future.

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Tickers in this Article: TDF, CEE, LDF, UL, EEM, VEA, MTL, IRL, ABV, ITUB

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