Individual investors are now increasing their holdings of foreign equities, but they have needed a lot of coaxing from mutual fund marketers.

What are these marketers telling potential customers?

Joseph Polidoro, vice president for funds marketing at BT Global Investment Management, a unit of Bankers Trust Co., New York, says the No. 1 selling point is diversification. "That's the reason why you're getting investors to move down the road to foreign equities in the first place," he said.

Allen Croessmann, managing director of investment products and services at BankBoston, agrees that diversification is the biggest selling point. "The feeling is that it makes sense not to keep all your eggs in the domestic basket," he said.

But Mr. Polidoro of BT added that not all individuals are candidates for foreign equities. He said individuals have an investment life cycle, beginning their investments by buying prominent S&P 500-type stocks. Then they may migrate to midsize and smaller-cap domestic stocks. Not until then are they ready for foreign equities.

At BankBoston, Mr. Croessmann has a somewhat different perspective. "Over the last several years, investors have gotten more sophisticated," he said. "We have a lot of retail investors in addition to private banking customers" who are candidates for foreign diversification.

Mr. Croessmann said foreign exposure made sense for investors with as little as $50,000 in equities.

Other marketers offered a variety of selling points, including these:

Gains may be larger outside the U.S. market. Annual returns at home have trailed those of a number of other markets each year for more than a decade.

Some of the fastest-growing companies are in Latin America and Asia.

Major foreign markets have tended to recover more quickly from a slump than has the U.S. market.

The big caveats are that investors in foreign equities are taking the risk of unfavorable currency fluctuations and possible political instability, two factors they need not grapple with at home.

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