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Section: 6 International Diversification
Benefits
Opportunities: International equity investing offers
greater opportunities than does domestic investing as a larger universe of
assets is available for investment.
Diversification: International investing offers investors
better risk/return trade offs.
Low correlations between return indices enable you to diversify. Low correlations are due to i) local monetary and fiscal policies ii) differences in institutional and legal systems iii) regional economic events.
Barriers
Lack of liquidity.
Currency controls.
Country-specific tax regulations.
Less developed capital markets.
Exchange rate risk.
Lack of information.
Difference in Accounting Standards.