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For many long term investors, one of the biggest hindrances to their portfolios could be their propensity to root for the home team. Dubbed home-country bias, the majority of us overweight our domestic stock markets. The idea is that we tend to believe that our nation’s equities markets are both safer and will provide higher returns.

That simply isn’t true. No single stock market has ruled the roost in terms of returns each and every year. Home-country bias is costing investors some serious long term gains.

However, you don’t have to be average. There are plenty of tools that allow regular retail investors to go global for dirt cheap. Adding international exposure has never been easier. (For more, see: Investing Beyond Your Borders.)

Plenty of Reasons to Go Global

If you feel like you have little to no international exposure in your portfolio, you’re not alone. According to a recent report, home-country bias is rampant in the U.S. Investment manager Fidelity Investment’s latest research shows that on average, U.S. investors keep about 72% of their investments in U.S. stocks and about one-third of investors are significantly overexposed to the U.S. with absolutely zero exposure to international stocks. (For more, see: Does International Investing Really Offer Diversification?)

That’s a missed opportunity.

It makes sense that the United States would be featured so prominently in many portfolios. After all, it's the single largest world economy, and its financial markets are some of the most liquid. However, there are plenty of overseas alternatives now and more present themselves every day. Back in 1985, when looking at the world’s stock market capitalization, U.S. stocks made up around 50% of that total. By 2012, that amount had dwindled to just 35%, with developed market international stocks making up around 42%. Emerging markets had growth to nearly 23% of the world’s total market cap. This example just shows how the by focusing on strictly U.S. stocks you could be missing a huge opportunity abroad.

Remember, if you don't have a Samsung Electronics Co. Ltd. (SSNLF) phone in your pocket or a Honda Motor Co. Ltd. (HMC) sedan in your driveway, there's a good chance that your neighbor will. (For more, see: How to Invest in Samsung.)

A Globally Balanced Portfolio

Diversification benefits aside, investors focusing on home-market bias could be missing out on some serious long term gains as well. According to Fidelity’s report, a globally balanced portfolio returned more than the S&P 500 and did so with significantly less risk. Since 1950, a portfolio of 70% U.S. stocks and 30% international stocks returned 11.4% a year. That’s about 2% more than the straight S&P 500 portfolio, with about 10% less risk.

Other reasons investors should go global? Foreign firms usually have a more dividend-friendly culture. Rather than keeping cash on hand as retained earnings, they pay them out to shareholders. For those seeking income solutions in our zero-interest-rate world, global stocks should be considered. In addition, there's an anticipated long-term decline of the U.S. dollar to worry about. Investing in nations with growing economies and appreciating currencies compared to the dollar can be a salve. (For more, see: These International Dividend ETFs are Cheap Cheap Cheap.)

ETFs Offer Easy Exposure

With many financial advisors suggesting keeping between 35% and 50% of a portfolio's stock holdings in foreign companies, the average investor has a lot of work to do. Luckily, there are plenty of options for retail investors to gain that exposure. The easiest way could be the Vanguard Total International Stock ETF (VXUS).

VXUS offers exposure to both international developed market stocks as well as emerging market companies. All in all, the ETF covers 98% of the world’s non-U.S. markets and holds 5,673 different stocks. Top holdings for VXUS include investment bank HSBC Holding plc (HSBC) and French energy major Total S.A. (TOT). Expenses for the fund run a dirt cheap 0.14%. For investors strictly looking for large-cap stocks, the Vanguard FTSE All-World ex-US ETF (VEU) offers similar broad international exposure — minus small-caps. (For more, see: Evaluation Country Risk for International Investing.)

Don't Forget Emerging Markets

Investors looking to add some international flair may want to dedicate some specific capital to emerging market equities. Over the last five years, an emerging market nation has held the top spot in terms of market returns each year. The iShares Core MSCI Emerging Market ETF (IEMG) offers large- mid- and small-cap exposure to faster growing developing market economies. Another option, is the Market Vectors MSCI EM Quality ETF (QEM), which applies screens to create a portfolio of stocks with the best dividends, earnings growth, and return on equity. (For more, see: Get Emerging Market Exposure With This ETF.)

With broad international exposure out of the way, investors can now add some spice.

The SPDR S&P International Dividend ETF (DWX) offers a generous dividend yield of 5.30% for those investors seeking income. DWX does this tracking some of the international world’s highest dividend payers. Also from State Street is the SPDR Dow Jones International Real Estate (RWX), which allow investors to own non-U.S. real estate. (For more, see: Looking Abroad for Strong Income.)

The Bottom Line

Most investors never stray away from their borders when it comes to portfolio construction. That's a shame, because adding exposure to international investments adds several benefits. With the aforementioned ETFs (and their components) investors should find it both easy and advantageous to go global with their investments. 

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