When viewed as a stand-alone asset, the variance of a country fund's return is greater than that of either its net asset value or the fund's local stock index. When held as a reasonable 25% proportion of a diversified portfolio, a country fund's contribution to the total risk of a U.S. investor's portfolio is similar to that of direct investment in the fund's net asset value or the local stock index. Thus, for both open as well as restricted foreign capital markets, closed-end country funds offer a readily accessible means of international diversification that is comparable to direct investment. While country fund returns are related to movements in the U.S. stock market, this sensitivity is greater for emerging capital market funds than for developed capital market funds.