Monthly Archives: September 2017

Diversify Assets With International Funds

In asset management, diversifying your investment portfolio is necessary if you want to achieve long term growth. Diversification allows an investor to hedge drops in a certain allocation sector. Especially with international stock and bond funds, you’ll find that you can diversify your portfolio even further.International stock funds used to get a bad rap because of their volatility. Stocks in the third world, especially, had the stigma that the economy is at risk; therefore, a person could lose his or her shirt in this type of investment.Today, foreign stock and bond funds are hot. The recent economic emergence of countries such as China and India has US investors seeking pearls in a sea of investments. Recent booms in internet companies, auto makers and electronic companies have stimulated interest in emerging economies. Although this might remind us of the internet boom of the 1990s, international funds are here to stay. But will it provide proper diversification for asset management?

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International funds do provide diversification. The advantage of investing in overseas is that the markets run in different cycles. If the US is in an economic downturn, a foreign country may not necessarily have the same problems. So having a portfolio in both countries will allow you to weather the economic volatility. Exposure to overseas means reduced risk, thanks to diversification.Interestingly, international stock funds in the past 5 to 10 years have performed better than US stock funds, based on average annualized returns. In fact, they have performed in the double digits returns (10% or more) during these time frames. The benefits not only provide you with diversification, but international funds can provide higher return potential in your asset management.For investors with more risk tolerance, emerging growth funds target small, but emerging countries throughout the world. Countries such as Thailand, Brazil and Indonesia can provide investors a wild ride, but a chance for great gains. It’s important to remember that you do not get overexposed in one type of fund when you diversify for your asset management. Consider this option if you’re willing to stomach the ups and downs of risky stocks. Some financial analysts say you should not get more than 15% of your portfolio in these investment vehicles.Even within international funds, you can still diversify your wealth. There are so many different types of investment vehicles that anyone can create a well-diversified portfolio. Consider small, mid- and large-cap stocks throughout differing countries from emerging nations like China to well-established industrial nations like Japan. There are even interests in overseas real estate in the form of real estate investment trusts (REITs). Property can be purchased as like any commodity or stock in an exchange.

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Diversification isn’t the only benefit of an international fund. Foreign currencies could also help weather currency volatility. If the dollar weakens, relative to foreign currency, corporate profits may be watered down due to the real worth of the dollar. This can hamper the returns for US stocks. On the other hand, a modest earning from a foreign stock can do well if the currency real worth is higher than the dollar.Asset management has a goal of helping individuals to diversify their portfolio. One strong way to diversify a holding is to invest partly into international funds.