Article: Global diversification

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Puthan(VJ) Vijayan is the Principal member of PMV Investment Advisors, LLC. The firm is a Registered Investment Advisor. VJ is a Certified Estate Planner and Registered Financial Consultant, with over 15 years of planning and investment experience.

Global Diversification

If an investor invests only using investment opportunities in the US, that investor would be ignoring/missing out on other opportunities in the rest of the world. It would be like using  meat only for all your meals, ignoring  other  nutritious foods that go toward a  well balance diet and nutrition.  It is commonly stated that about half of the world's stock market value is in countries other than the US.  As a serious investor, one cannot afford to ignore investing globally.

One of the major reasons is missingout on growth in other developed,developing and emerging markets.It has been documented that European Union member countries and countries in Europe have out performed the US stock market  for the past ten years.India and Chinese economies has been frowing rapidly over the last ten years as well.It can be similarly said of the Asia Pacific rim ex Japan, Latin America, South Asia and perhaps southern Africa.

Another major reason is because the above mentioned economies are rapidly growing,investors are finding attractive investments in those respective countries' equity and fixed income markets.There are increasing transparency in those markets as equities are listed in multiple market exchanges, and this has helped and encouraged increasing dividend payouts and yields and valuations.

Alongside the above charecteristics,global investing allow investors to try to lower portfolio volatility.Investing in investment ideas outside of US is primarily due to the commonly held belief that there are still markets that move somewhat counter to US markets.Thus the counter market cycles may help a portfolio reduce its volatility.I believe more importantly why a portion of a portfolio designed for the long term should have a element of investment ideas located in non-US territories is because there are tremendous ideas in those markets which can contribute to your portfolio growth and increasing return on your investment.

Puthan(VJ) Vijayan
PMV Investment Advisors,LLC

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