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Countries we focus on: U.S. U.K. and Brasil
Two of the chief reasons why people invest in international investments and investments with international exposure are:
- Diversification. International investing may help investors to spread their investment risk among foreign companies and markets in addition to local companies and markets.
- Growth. International investing takes advantage of the potential for growth in some foreign economies, particularly in emerging markets
Diversification is a familiar term to most investors. In the most general sense, it can be summed up with this phrase: “Don’t put all of your eggs in one basket.” While that sentiment certainly captures the essence of the issue, it provides little guidance on the practical implications of the role diversification plays in an investor’s portfolio and offers no insight into how a diversified portfolio is actually created. Birchwood Stanhope, will provide an overview of diversification and give you some insight into how you can make it work to your advantage.
Changes in currency exchange rates and currency controls.
Using more than one currency as an investing or financing strategy. Exposure to a diversified currency portfolio typically entails less exchange rate risk than if all the portfolio exposure were in a single foreign currency.
Political, economic, and social events.
Geopolitical risks can have a tremendous impact on global investment portfolios.
By understanding how geopolitical risks impact their portfolios, investors can avoid making potentially costly mistakes by overreacting to the market.
Securities with similar characteristics and behavior in the market.
Diversification is the idea that you can reduce the overall risk level of your investment portfolio by spreading your investments across different asset classes. There is usually little correlation, or an inverse or negative correlation, between different asset classes.