Bridge over ocean
1 May 2011 Financial Analysts Journal Volume 67, Issue 3

International Diversification Works (Eventually)

  1. Clifford S. Asness
  2. Roni Israelov
  3. John M. Liew

Critics of international diversification observe that it does not protect investors against short-term market crashes because markets become more correlated during downturns. Although true, this observation misses the big picture. Over longer horizons, underlying economic growth matters more than short-lived panics with respect to returns, and international diversification does an excellent job of protecting investors.

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