The current decade has been a great example of why foreign investing is so important. While the US has been on a decade-long round trip to nowhere there have been many foreign destinations that have had normal or close to normal bull market returns. The simple decision to allocate to foreign may be the single most important decision someone could have made this decade (either that or allocating to commodities).

As important as foreign is I think accessing foreign through a broad based product like iShares MSCI EAFE (AMEX: EFA [1]) is a bad way to go. Very simply, most of the investment virtues inherent to the various investment destinations within end up getting blended away or the fund allocates too much to Japan.

Anyone willing to invest at the single country level has to realize there is a lot of work to do. I’ll spell out an example with New Zealand.

New Zealand is often thought of as a commodity country but that is not quite right, at least not yet [2]. NZ has resources, if that is even the best word, that include timber, dairy products and wool but the country should not be though of as a carbon copy of Australia.

For now the economy in New Zealand is slowing down [3], the Reserve Bank of New Zealand just cut is cash rate to 8% with more cuts expected. There is a deficit that is roughly 9% of GDP. There is a long laundry list of items that spell out the case for a weaker NZ dollar, aka the kiwi, and for now it probably makes more sense to stay away as their bear market, while a little further along than the US’, might still have a way to go.

I first invested in New Zealand for clients with NYSE listed NZ Telecom (NYSE: NZT [4]) in 2003 and sold it in early 2006 and have not put clients back in since but I expect I will at some point in the future.

As the chart shows, at times, when the country has the wind at its back the returns can be very strong and the correlation to the US can be low. Put simply, the things that make NZ tick are different than what makes the US tick and while the last year or so has been rough, there will be periods in the future where it will make sense to be back in.

A couple of positive catalysts for the future include NZ’s free trade agreement with China, visibility for a surge in food exports and the potential exchange listing of Fonterra Co-Operative Group, the country’s largest dairy co-op.

Clients have benefited from investing in New Zealand in the past and will in the future. Even though there is no exposure now, that does not mean don’t pay attention. By staying in touch with what is going on it will make re-entry much easier to do. Investors willing to invest at the country level need to do this sort of monitoring with countries they do own and countries they don’t own now. It is much easier to follow a country over time than try to learn from scratch after you hear a segment on CNBC.