What is International Diversification?
International diversification is an investment strategy that aims to reduce the variability in returns by incorporating assets in international markets whose economic cycles are not correlated with the economic cycles in your home country. Essentially, investing overseas can be a strategic way to help reduce risk in the long term by providing more balanced returns. Most international investments are classified as being in either developed markets (more safe) or emerging markets (more growth). Keep in mind that the World Bank’s criteria for a high income economy in 2017 is a gross national income (GNI) per capita of $12,476.1
Some examples of more developed countries [high per capita income economies] include:
Emerging [middle income] economies include countries such as:
Low income economies pose considerable risks for investors, and investments in countries without the infrastructure to support development could be ill-advised.