Investment Diversification

Global Diversification should be an important part of your Risk Diversification Investment Strategy

One of the keys to enjoying higher returns on your investments while shielding yourself from risk is to employ a diversified asset management strategy. And while you should diversify across asset classes and industries, you’ll also want to use international diversification to spread the risk around.

Why diversify globally? Because then your portfolio won’t be impacted as much by location-specific events, such as war, natural disaster and even local economic conditions.

That’s not to say that using this diversification model alone guarantees big returns or low risk. That’s because international markets don’t operate in a vacuum. Sometimes global events – like the 9/11 terrorist attacks – create markets that move together (i.e., they’re correlated), at least in the short term.

Global Diversification in today’s markets

Indeed, there are several factors influencing these correlations, which in turn affect how your global diversified funds perform. Three of these factors include:

> Looser laws and policies with regards to foreign exchange.

> Large, diversified businesses that operate globally.

> Loosened controls of major financial systems.

Still, those with global diversified interests usually can expect higher returns in the long term.

Now let’s look at a simple diversification strategy as an example of how international diversification can work for you…

Let’s suppose the U.S. dollar is weakening. If you want to invest in U.S. companies, you’d focus on those that export goods. But if you also diversify your interests and invest in foreign markets, then you’ll want to invest in markets that import U.S. goods as well as those foreign markets that do business locally.

Seems like a simple enough diversified trading strategy, right? But here’s the problem: Dabbling in foreign markets can be confusing… and even dangerous at times.

You see, in order to enjoy the benefits of international diversification, you need to first overcome obstacles such as:

> Varying accounting practices and standards.
> Language barriers.
> The extra expense associated with investing in certain foreign markets.
> Less transparency.
> Questions about who oversees the company and/or how to deal with legal issues.

And that means the advantages of diversification fade away fast if you’re not experienced with international diversification.

Fortunately, you don’t have to be an expert in foreign markets in order to enjoy the low risk and high returns associated with international diversification. Instead, all you have to do is talk to a diversification specialist who can help you create the best international asset allocation strategy for your needs.

And that’s exactly what we can do for you. There’s a diversification specialist standing by ready to help you secure your future – so contact us today and let’s discuss -