Expand Your Horizons with Global Investing
Did you know that Canada accounts for only 3% of the world's equity market capitalization? Therefore, an investor who invests only in Canada is neglecting approximately 97% of existing investment opportunities. Investing globally translates into a broadening of horizons, and subsequently creates a richer set of investment opportunities.
In today's investment environment, financial success often demands new strategies that explore opportunities outside the comfortable markets of Canada. Global reach means global strength, and the ability to benefit from the worldwide economic dynamic. The discerning investor recognizes a number of motivational factors for international investing. These include expanded investment opportunities, portfolio risk reduction and overall potential superior portfolio performance.
The first principle of successful investing is to diversify. This means, quite simply, "don't keep all your eggs in one basket." After all, you don't put all your valuable assets in one stock or one industry, so why would you place all your assets in one nation? By diversifying across countries, a global investor is not subject to the vagaries of market values that a single nation investor faces. Therefore, diversification is a powerful tool in reducing market risk.
It has been empirically proven that diversification reduces risk in a portfolio. By selecting securities from different countries that do not always move together, the chances of simultaneous portfolio declines are substantially reduced. Securities from abroad also offer different risk/return characteristics and special features that may not be available domestically, but may be desirable in a particular portfolio. International investing allows investors the opportunity to maintain some of their wealth in currencies other than their own. Correspondingly, astute investors hedge or protect against a decline in their domestic dollar value by holding some other currency denominations, thus realizing potentially higher rates of return.
While increasing portfolio returns and reducing risk are two of the key reasons to look beyond traditional markets and out into the rest of the world, investing globally also provides access to some of the world's most profitable industries. From Malaysia to Munich, global investing brings the world to your portfolio.
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The information contained herein is considered accurate at the time of posting. CIBC and CIBC World Markets Inc. reserve the right to change any of it without prior notice. It is for general information purposes only.