Describe someone seeking portfolio diversification

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Reference no: EM131004949

Identify and describe EU/China for someone seeking portfolio diversification.

Explanation

To identify a country other than the United States for someone seeking portfolio diversification I would first need to understand their investment goals. The investor could seek a diversified portfolio thats aggressive, balance, or conservative. My answer to this question is under the assumption the investor desires a balance diversified portfolio.

To create a balance diversified portfolio, I would suggest adding EU's Euro and the Chinese's Yaun currencies to the portfolio. Supplementing the United States investments with investments in the second and third largest economies will protect investment from currency fluctuation across three continents. The great benefit of this strategy is diversification is most effective when investments are negatively correlated. That is, when usd declines, Euro increase, and such might Yaun.

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Reference no: EM131004949

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