I know many of you have questions about foreign exposure and why, if foreign markets are now lagging domestic ones, I continue to recommend Vanguard's best foreign funds.

So here are 6 ways to invest in overseas now:

1. Stay diversified. Proper portfolio diversification demands having direct exposure to foreign markets. Taking an all-or-nothing approach would smack of market-timing, and would be counterproductive in the long run (see also, "Mutual Funds Dos & Don'ts").

2. Invest in Overseas Opportunities. It wasn't too many months ago that, as foreign markets continued to outpace U.S. markets, many investors and pundits were calling for jacking up exposure to foreign markets to as much as 50% or 70% of your portfolio. I believed these were completely unreasonable levels and argued against a greater increase. In fact, those people with 50% or more of their portfolios overseas now probably rue the day. (The same could be said for commodities, but that's another story entirely.)

3. Wait and Capitalize in the Rebound in Financials. While the U.S. economy's financial problems have caused problems overseas, it's also the case that once the dust appears to be settling here, this may catalyze foreign markets to rebound. Even when the U.S. economy and markets do rebound (and they will), stronger growth will still be found in foreign markets, and despite exposure through multinationals at home, direct exposure with managers investing "on the ground" in these markets should stand us in good stead (see also. "Fire Sale for Financials on Wall Street").

4. Take Advantage of the Dollar's Strength. The currency issue is always a part of foreign market investing, and yes, the dollar is strengthening-or at least it has been of late. And, should the ECB be forced to cut rates to stimulate growth in Europe, then the dollar will gain some more. However, that kind of rate-cutting stimulus could also cause foreign bourses to rise on optimism, much as our markets have often responded to rate cuts, so any negative from a currency headwind could easily be negated or overwhelmed by a market tailwind.

5. Keep an Eye on Top Exporters. And, if you were watching the performance of the big U.S. exporters last Thursday, like machinery giant Caterpillar or construction giant Terex, their stocks were pummeled on fears that the rising dollar would cut into their sales and earnings. So, are U.S. stocks really safer in a rising dollar environment? The answer is yes (see also, "Three Ways You Can Profit From the Falling Dollar").

6. Invest in Internation Funds at Vanguard. The dollar is gaining strength. As our currency strengthens, mega-cap multinationals are commensurately vulnerable to earnings growth concerns in the near-term, even though global growth will likely remain their core driver long-term. A stronger U.S. dollar makes foreign companies more competitive, removing some of the U.S. companies' advantage. And only by investing in foreign markets do you gain access to those foreign companies' stocks (see also, "How to Invest in Emerging Market Stocks").

All of this points to the need to continue to invest in international funds at Vanguard. But which ones? Not to worry. I give my buy, sell, and hold ratings for all of Vanguard's international funds in every issue of The Independent Adviser for Vanguard Investors. Just go to the top of page 9 of the latest issue.

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