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.
Read the Complete Article in Financial Analysts Journal
Financial Analysts Journal
CFA Institute Premium Member Content
This is available to the following CFA Institute membership classes: CFA charterholders, Professionals, and Affiliates.