Caveat Emptor Key to Global Investing

Investing in different markets around the world has become an integral part of investment management. Institutional investors, pension fund managers, and money managers are increasingly looking to diversify their portfolios by investing in foreign markets as a way to enhance their risk/reward ratios.

However, with this diversification has come new risks beyond simply understanding the different companies. Instead, the manager must consider a whole realm of market-based risks including price volatility, political risks, liquidity issues, disclosure issues, weaker shareholder protection, higher transaction costs, and less reliable settlement systems, among others. Any one of these risks can influence the manager’s market allocations. Failure to take these issues into account can have a significant impact on the eventual performance of a portfolio.

Following are some of the results of a survey compiled by Ennis, Knupp & Associates of non-US, stock-market suitability. Their study examined many issues, including those listed above in thirty-five different markets. For our purposes we have drawn our conclusions out of this data particularly on those issues most frequently identified by individuals in the nineteen different markets covered by this year’s Ranking Issue.

This is only an excerpt of Caveat Emptor Key to Global Investing

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