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March 25, 2014 at 09:20 PM
Leslie Beck of Beck Investment Management, LLC, can pinpoint what started her on the path to international investing. It was Sir John Templeton, whose writings and talks on the subject convinced her back at the beginning of the 1980s that it was a wise action to take.
His position, said Beck, was the need for “diversification, but his argument was, ‘How do you ignore the rest of the world?’” And Beck has taken his advice to heart, from the time she was a stockbroker in the 1980s—even though it could be a challenge at the time to broaden client portfolios outside the borders of the U.S.
“At that time, it was an uphill battle to get any international investing,” said Beck. While Templeton funds with international exposure were available, and she used them, it was difficult to go beyond that without an outside manager. The feeling in a lot of trust companies was “‘If we can’t manage it ourselves and can’t buy individual bonds, stocks and currency, we wouldn’t hire outside managers to do that.’ The only way we could do international investing was with ADRs and dollar hedging, and obviously no international bonds,” she said.
Although Beck did invest internationally, she “did not have anything in emerging markets unless it was in a Templeton fund at that time, just because [emerging market stocks] were so thinly traded. Not that they aren’t now, but you had to get an appointment to get a time to trade.”
Now, instead of having to set up appointments in different time zones, or being confined by the need to find outside managers who can navigate international waters, Beck uses mutual funds and ETFs, as well as international mutual real estate funds, “which rebounded well after horrible lows in 2008/2009.” These days she relies primarily on PIMCO for mutual funds; she also uses international developed and emerging market bond mutual funds.
Templeton, she pointed out, had called accurately when to more heavily invest in international than U.S.—70% in the former and 30% in the latter—during the 1980s. In 1991-1992, she recalled, he’d suggested the reverse, and in 2000 advocated a market-neutral stance in portfolios. “He had a growth bias,” she said, which led him to make a strong case for international when he felt the environment warranted.
