Abstract
The purpose of this paper is to analyze the effects of international portfolio diversification on an investment portfolio. In doing this, alternative investment vehicles will also be examined. Finally, derivative securities will be discussed, as well as how they can further enhance a portfolio's performance.
Investment Enhancement Paper
There are several factors to consider when one is trying to evaluate on how to invest their money. A good starting ground however is to evaluate not just which funds to pick, but rather what the portfolio should be comprised of. There are three different separate items that will be evaluated here. First, the effects of international diversification on an investment portfolio will be analyzed. Next, alternative investment vehicles will be examined and discussed. Finally, how the use of derivative securities can further enhance a portfolio's performance will be explained.
Several people have looked at choices outside of investments within the United Sates. International portfolios are not uncommon anymore. International portfolios can create an even higher diversification for the customer. This is because if the United States stock market crashes, the majority of your portfolio will pretty much be lost. Even if there is a dip, overall, the impacts could be huge. However, if one was to take say 40% of there funds and allocate it in international stock markets, all of your investments will not be contingent on how one specific stock market or economy is doing. Thus, a much broader form of diversification is created.
After one has evaluated if an international portfolio is something that they would want to invest in, the next step is investing alternative investment vehicles. There are several different t ...