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Diversifying with
International Investing |
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Chances are you’re already diversifying your portfolio
using international investing. If not, consider that you may be driving a
car built in Germany or Japan. You may work on a computer made in Korea, or
wear leather shoes from Spain. And just as the money you spend each day
contributes to the growth of these overseas economies, continuing to add
international investments to your investment mix may contribute to the
growth of your investment portfolio.
Proper Diversification Has No Geographic Borders
Did you know that foreign markets represent roughly 60% of the world’s
capitalization? So if you’re not investing abroad, you may be missing out on
more than half of the world’s investment opportunities. Why not take
advantage of the world’s expanding marketplace? Some of the best
opportunities for accelerated growth may be located beyond U.S. borders.
Emerging markets for example, produce more than half of the world’s goods
and services, but represent only 4.41% of stock market capitalization.* As
these foreign equity markets expand to reflect the size of emerging
economies, the potential for growth may be significant.
You may shy away from international markets, because you think of foreign
investments as risky. Indeed, international investing does involve risk not
associated with domestic investing like currency, economic and political
risk, limited liquidity and volatile prices as well as the difficulties of
receiving current and accurate information. However, international
investing may allow you to diversify risk and contribute to the strength of your
portfolio in two important ways:
First, U.S. and foreign markets all experience economic cycles differently
and rarely move in sync. Investing in a number of different countries may
help you take advantage of the better performing markets while cushioning
the impact of any under-performers. Second, the
top-performing markets are often located outside of the U.S. In fact, in the
1990’s foreign markets have out-performed the United States in every year
but one. **
So, if you are not investing in international markets because they seem too
risky, or because you are satisfied with the recent returns in the domestic
markets, think again. Not only may you be missing out on some of the best
performing markets in the future, you may be missing out on the opportunity
to reduce the risk/volatility of your investment portfolio as well.
* Source: Morgan Stanley Capital International
** Source: Ibbotson Associates |
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Return to Investment Primer Index )
This report is
prepared for general circulation and is for informational purposes only. It
is not intended as an offer or solicitation for the purchase or sale of any
financial instrument or service. Market prices and other data may be
obtained from outside sources and is not warranted as to completeness or
accuracy. Any comments, statements and/or recommendations made herein do not
necessarily reflect those of First Allied Securities, Inc., its subsidiaries
or affiliates, and are subject to change without notice. |
Securities offered through
First Allied Securities, Inc. A register broker/dealer. Member FINRA/SIPC.
Schannep Investment Advisors is a registered investment
adviser in the state of Arizona. First Allied Securities, Inc. does not endorse or
support this web site, nor are they affiliated with Schannep Investment Advisors,
Inc.
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