By Aviya Kushner, Contributing Writer

Looking for a way to get international exposure without too much risk of
getting burned? Though there's no absolutely foolproof investment strategy,
some of the biggest names in investing are turning to international index
funds. In 1999, according to Pensions and Investments, 23% of institutional
investment cash was indexed. And if the past is any indication, small
investors eventually follow the big guns' lead.

Indexing has several advantages. By spreading assets throughout an entire
country, region, or continent, one bum deal can't hurt as much. In the
international arena, where less information, privatization efforts, and
mergers make stock-picking tougher, the numerous-bets approach of indexing
can be comforting. What's more, indexing offers lower fees and a smaller tax
hit.

There's also the guarantee of something essential - a "toe in the
water," as Steven Schoenfeld, Head of Emerging Markets Strategy at Barclays
Global Investors, says. An index investor runs a smaller risk of missing out
on the next winning company, he points out. Making sure to be included in these
potential profit opportunities is an essential factor for Schoenfeld.

That lure is part of what domestic funds offer, and in the international
arena, Schoenfeld says, the "not-missing-out" piece is more crucial. Add the
automatic diversification from any international investment and it's no
wonder insitutional managers are taking a good look at international
indexing.

Meanwhile, in the retail arena, the runaway success of domestic index
funds has prompted fund companies to expand their product lines. As fund
companies rush to introduce new index funds, they're naturally thinking
globally. Everything from a "fund of funds" international index to a
Germany-only index is now available, and more are coming soon.

But is foreign indexing the way to go? IndexFunds.com talked to three
high-profile managers to get their views. To check out all the international
index funds out there, and to hear what the brains at Barclays Global
Investors, Schwab, and Vanguard have to say, click here.

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