The volatility of the domestic and global market creates an opportunity for investors to diversify portfolios. With the uncertainty of the new administration’s effect on trade, looking to global funds can help reduce overall risk in a portfolio. However, investors need to understand the political impacts on certain industries and currencies. Investors should also look at the potential risks associated with actively managed global funds to create a long-term growth plan.
Should You Invest in Global Funds Now? (Economic Times, December 28)
Geographically diversifying an equity portfolio has benefits, but it is important to take financial goals and risk allocation into account. With the uncertainty of the current market, especially with the upcoming U.S. administration change, understanding how currency plays a role in international investing is important. With the Trump administration’s promise of being pro-business, there is potential for global markets to benefit. An investor’s domestic market can help determine if international funds should contribute to the client’s overall portfolio.
Despite emerging markets’ declining ratings and negative outlooks from credit agencies, investors see potential. Ricardo Adrogué believes ratings agencies are “confusing structural versus cyclical problems when evaluating the sector.” As economic data is reported for emerging markets, fund managers continue to see potential and invest in international portfolios. Focusing on industries with growth potential for the long-term could produce favorable returns.
Why Investing in Europe Is Still Relevant to Advisors (Insurance News Net, December 28)
With the U.S. market continuing to be full of unknowns in the coming months, a global portfolio could help reduce the risk. The Dimensional International Small Company Index reports “International small companies have returned more than 14 percent annualized since 1975 which includes during times of turmoil and uncertainty.” Although the political environment in Europe has created volatility in the market, certain industries have continued to grow and are predicted to profit in the long term.
