FLORIDA TRUSTEES: A TIME TO INVEST OFFSHORE? A LOOK AT FOREIGN STOCKS

Is now a good time for Florida trustees to invest trust asset overseas?

Today’s Wall Street Journal, www.wsj.com, saw much commentary on investing offshore.

Wall Street Journal reports Anjani Trivedi, Ben Edwards and Jake Edwards suggested that money managers, content with returns for domestic stocks are, nonetheless, not satisfied. They are looking overseas to keep and perhaps add to their gains between now and year end. Emerging markets are the focus of many money managers’ attention.

Meanwhile Serena Ruffoni, Tommy Stubbigton and Alelx Brittain had us wondering if Europe is the place to invest, notwithstanding troubled economies and Euro crisis issues with Italy and Spain.

So, what’s an investor or a trustee to do?

As many readers know, Florida trustees are guided by the prudent investor rule. Trustees need a strategy or a plan for investing, which should include diversification. While courts don’t expect Florida trustees to have a crystal ball, or to be market timers, they do insist on evaluation and contemplative decision making. Today’s Wall Street Journal’s commentary and reporting reinforces a Florida trustee’s duty to diversify and this means looking overseas.

A Florida trustee should consider whether foreign stocks make sense for the trust portfolio. If so, consider whether you want established countries like Germany and England or emerging markets. India, Russia, Brazil were three countries whose investment returns were more than strong over the recent past, but which saw billions rotate out and away from those countries’ stock markets. Today’s Journal suggests that money may be flowing back into those regions, as well as more established foreign markets. Likewise, this week’s Barron’s , www.barrons.com, took a strong look at Latin America.

In the end, the Florida trustee will first have to determine if investing overseas makes sense. Next, do you invest in emerging markets or established countries and stock markets? Finally, how do you get there? Index funds and mutual funds with stellar managers?

A judge in Florida won’t expect perfection. But you do need a plan. You, the Florida trustee, needs to be able to demonstrate that you considered foreign stocks and overseas markets.