International diversification

International diversification

The attempt to reduce risk by investing in more than one nation. By diversifying across nations whose economic cycles are not perfectly correlated, investors can typically reduce the variability of their returns.

International Diversification

Investment of one's portfolio in securities that are traded in various countries. This is done to reduce risk, often political risk. For example, if one country's government announces a larger than normal budget deficit, or the central bank raises interest rates, this may affect security prices in one country, but not necessarily in other countries that did not take equivalent steps. Likewise, if a whole industry fails in one country but thrives in another, investing in the same industry in both countries hedges one's risk. Some analysts argue that international diversification is less effective in an era of globalization, but other analysts dispute that.
References in periodicals archive ?
"Following the fluctuation in global real estate markets, there are now major opportunities for Middle East buyers to look at international diversification of their property portfolios,"
Most SWFs adopt a very conservative investment approach that focuses on international diversification by region and by asset class
Chief executive James Henderson said: "It's been a good performance in 2014, driven by both the continued development of our UK-facing operations and our international diversification, together with a successful World Cup."
"In this current environment, Bank of Beirut's international diversification strategy provided an excellent hedge against regional pressures.
"Bank of Beirut's international diversification strategy produced a powerful hedge against slower growth in the region.
This observed lack of international diversification is commonly referred to as home bias.
In an era of sluggish domestic growth, the business spotlight is once again turning to international diversification as a means to harness global growth opportunities and production efficiencies.
This international diversification is unique to us compared to other peer-to-peer lending services as it allows investors to benefit from the different interest rates across the Eurozone.
By borrowing from the resource-based theory, authors in the strategic management literature seem to have found a general consensus about the performance implications of business diversification, where a 'business' may refer both to a product (product diversification) or a geographic area in which the firm is operative (international diversification).
Rusal opposes product and international diversification. A discussion on long-term strategy by Norilsk's BoD was another
Furthermore, increased learning and innovation are a result derived from firms' economies of scope gained through international diversification (Kochhar and Hitt, 1995).

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