An investigation into the relevance of international portfolio diversification from a South African perspective
Loading...
Date
2020
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Western Cape
Abstract
Diversification is one of the more familiar concepts in finance because of its ability
to curtail risk towards investors. However, for diversification to be efficient, the
assets combined should have inversely related price movements. In the same light,
previous research done on international portfolio diversification has consistently
found that having investments diversified across different global markets that have
low to medium correlations helps to get as close to an optimal portfolio as possible.
However, previous research also indicates that both global financial integration and
exogenous shocks increase correlations among international markets, hence
negating the benefits of international portfolio diversification to an extent.
Therefore, with global integration on the rise, coupled with economic and political
instability in some BRICS nations, the research examines these factors and gauges
the current viability of international portfolio diversification from the perspective
of a South African investor.
Description
Magister Commercii - MCom
Keywords
Home bias, Financial integration, Exogenous shocks, Ibovespa SSE Composite, FTSE 100, S&P 500, JSE ALSI, Index, Developed market, Emerging market, International portfolio diversification