Considerations for investing in non-U.S. equities
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چکیده
Executive summary. Non-U.S. equities currently account for close to 55% of global market capitalization, thus representing a significant opportunity for U.S. investors. In addition, the portfolio of an investor who combined non-U.S. equities with U.S. equities over the past several decades would have experienced lower average volatility—despite similar realized returns and volatilities in each region. U.S. investors who recognize this opportunity for diversification are increasingly investing abroad. According to data from the Investment Company Institute (2011), international equity funds constitute 27% of the total equity allocation of U.S. mutual fund investors. This paper weighs the shortand long-term impacts on a portfolio of currency fluctuations, correlations, cost, and expected risks and returns, and concludes that:
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