International diversification refers to the strategy of investing in multiple countries or regions around the world. By spreading investments across different countries, it helps to manage risks and take advantage of opportunities in various markets. This approach aims to reduce the overall risk in an investment portfolio by not solely relying on one country's performance and allowing investors to benefit from global economic growth.
Full definition
The Guys cover a variety of topics, including investing strategies, tax and asset protection planning, market and property due diligence, and
even international diversification.
While Vanguard founder Jack Bogle is right that U.S. companies have a huge proportion of their business overseas, the fact that performance can vary by so much is evidence that one does not get enough
international diversification by owning a total U.S. stock index fund.
But given the state of the U.S. market and economy,
while international diversification may be a sensible idea for most U.S. investors, its benefits are even more likely to accrue in the coming years.
In addition to adding better
international diversification as well as diversification from the US dollar (with inflation protected investments), you can also get some «taxation diversification».
By the way, a good way to get some diversification if you're a stock picker is to focus on international companies based in the U.S. Global giants such as Wal - Mart, Coke and IBM are easy to research, and they
offer international diversification, as they are exposed to economies all over the world.
As major developed economies around the world become more intertwined, and as long as the Federal Reserve continues to devote its $ 3 trillion balance sheet to encourage stock market speculation, it seems likely that intermediate - term correlations will stay high, and the potential benefits of a simple, un-hedged
international diversification strategy will come up short relative to its own history.
Business cycles don't match up from country to country
so international diversification means you benefit from growth in one country when others might be slowing
Features International Diversification: Why It Still Makes Sense History shows that international stocks provide diversification benefits over the long term, even though correlations become close during times of crisis.
The Schwab Institutional Diversified International Trust Fund is a collective trust fund designed to provide qualified retirement plan sponsors and participants with an international investment vehicle that gives them broad
international diversification through a single fund investment.
A paper by Clifford Asness and colleagues
called International Diversification Works (Eventually) argues that «long - term returns are primarily about a country's economic performance, and long - term economic performance varies across countries» in ways that can not be known in advance.
I am hoping to make some improvements to my past work, such as allowing asset allocations and savings rates to vary over time in my «safe savings rates» analysis, looking more at the role
of international diversification in retirement portfolios, accounting for taxes in retirement withdrawal studies, and investigating more about lifecycle or target - date funds for both the accumulation and retirement phases.
For example, if you hold shares of U.S. gold mining firms, do not expect significant added
international diversification by buying the shares of a foreign gold mining company.
Indeed,
while international diversification is a sensible idea for most U.S. investors, its benefits may be even more likely to accrue in the coming years, given that U.S. stocks are more expensive than their international counterparts and the United States» relative share of the global economy is declining.
International stocks are rising with the backing of quantitative easing programs, with European and Japanese stocks up 18.4 % and 9.1 % year - to - date.2 In sharp contrast: U.S. stocks returned 2.3 %.2 We think more moderate returns are likely in the cards for U.S. stocks this year, which makes a good case
for international diversification.