When it comes to the stock market lately, many investors have been solely focused on US-based investments. Limiting investments to only US stocks could prevent your portfolio from taking advantage of other opportunities. Zack Shepard, Vice President of Communications at Matson Money, recently appeared on After the Bell, airing on Fox Business, to discuss the importance of international diversification.
A common strategy at Matson Money involves portfolio diversification, where rebalancing investments and focusing on the long-term market should be the main priority. With the Matson Money strategy in mind, Zack Shepard explains that incorporating international investments into a portfolio may help broaden the opportunity for success. But, it should be noted that past performance is not a guarantee of future results, because no one has the power to predict the market and trying to anticipating market moves is a bad practice.
Matson Money and Shepard advise their investors to stay diversified globally in over 46 countries all over the world, because no one knows where the next large percentage movement of the markets may arise. They believe investors should stay internationally diversified, including the U.S. and emerging markets. Shepard highlighted Israel and Spain during his appearance.
Shepard explained that Israel has been under some turmoil yet their markets were up 26 percent according to MSCI index data over the previous year ending October, 2014. He also noted that Spain has had two recessions in the past 5 years, a 25 percent unemployment rate and 28,000 companies going bankrupt, yet their markets are up 7 percent according to MSCI index data over the previous year ending October, 2014. This shows that markets can be unpredictable, but internationally diversifying may offer beneficial opportunities. Not every investment strategy is proven to work and this past performance is not a guarantee of future performance.
*MSCI Individual Country Indices were created by MSCI and are available on MSCI’s website*
(http://www.msci.com/products/indexes/country_and_regional/all_country/performance.html) – The MSCI IMI, Large, Mid, SMID, Micro Cap, Small + Micro Cap, All Cap, EM, FM and ACWI Small Cap Indexes and their corresponding Value and Growth Indexes, together with the Provisional Standard, DM Provisional Small Cap and DM Small Cap Value and Growth Indexes are all based on the MSCI Global Investable Market Indexes Methodology. MSCI’s DM and EM Standard Indexes and their respective Value and Growth Indexes, as well as DM Small Cap Indexes, followed the MSCI Standard Index Methodology based on a sampling approach until June 2007, when they began to be transitioned to their respective Provisional Indexes in two phases (November 2007 and May 2008). Since June 2008, these indexes are also based on the MSCI Global Investable Market Indexes Methodology. MSCI Euro and MSCI Pan Euro Indexes, which were subsets of MSCI EMU and MSCI Europe Indexes respectively, transitioned in one phase as of the close of November 30, 2007, to the MSCI EMU Large Cap and MSCI Europe Large Cap Indexes, respectively. MSCI Provisional Indexes were maintained during the transition to the MSCI Global Investable Market Indexes Methodology from June 2007 to May 2008. The ongoing calculation of these indexes was discontinued on June 30, 2008. Historical index levels for these provisional indexes continue to be posted to provide access to their back-calculated history.