Why should you diversify with international stocks? Wealth Adviser Clarke Holt tells you this and more today on Elevate Wealth.

If your adviser isn’t suggesting a diversified approach to investing, we’d be glad to help! Schedule a free consultation. Just visit our Website below, and click the Let’s Talk button!

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FULL TRANSCRIPT:
Last month, one of our advisers was asked: "Why should I diversify with international stocks?" I love this question. With US stocks outperforming non-US stocks in recent years, some investors have begun to question the role that global diversification plays in their portfolios. There are many reasons why US investors would prefer a degree of bias in their equity allocation, using return differences over a relatively short period of time, as the sole input to the decision may result in missing opportunities that global markets offer. International and emerging market stocks have delivered disappointing returns relative to US stocks over the last few years. It's important to remember, though, that non-US stocks help provide valuable diversification benefits, and that recent performance is not a reliable indicator of future returns. Non-US stocks, including developed and emerging markets, account for 46% of the world market capitalization and represent thousands of companies in countries all over the world. If you're investing solely in US equities, you would not be exposed to the performance of those markets. Over long periods of time, investors may benefit from consistent exposure in their portfolios to both US and non-US equities. While both asset classes offer the potential to earn positive expected returns in the long run, they may perform quite differently over short periods. An approach to equity investing that uses the global opportunity set available to investors can provide diversification benefits, as well as potentially higher expected returns. If you were to try and pick a country to outperform, which would it be? To be honest, the difference would be significant between the best and worst performing countries. For example since 2000, the average return for the best performing developed market country was approximately 32%, while the average return for the worst performing country was around 15%. Diversification means an investor is unlikely to have the best or worst performing portfolio relative to any individual country, but it also provides a means to achieve a more consistent outcome, and more importantly, helps reduce and manage extreme losses that can be associated with investing in just a small number of stocks or a single country. If your advisor isn't suggesting a diversified approach to investing, we'd be glad to help. Schedule a free consultation with us. Just visit elevate-wealth.com and click the "Let's Talk" button. Thanks!

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