Submitting Campus

Worldwide

Department

Business Administration

Document Type

Article

Publication/Presentation Date

Summer 7-7-2020

Abstract/Description

The recent financial crisis amplifies the need for an updated and more universal investment strategy for both individuals and corporate investors. Diversification satisfies that condition, as it provides access to different economies operating in different countries while, simultaneously, it spreads the risk across different asset allocation[1]. However, to benefit the advantages of a diversified portfolio, a sophisticated decision making process and appeal to re-planning are required. Otherwise, international investors have to face the consequences of political-country risk and currency risk. The goal of this research is to correlate the benefits of diversification with risk undertaking for either individual or corporate investors. The main conclusion is that investors should engage in international diversification, eliminating home country bias where investors prefer to invest in their own domestic environment (Maniam et al, 2005). In addition, the paper finds that the optimal[2] portfolio is not static and its benefits vary across different types of markets included in portfolios.

* Dimitrios V. Siskos has over 15 years of financial experience in the industry sector in Greece and over 10 years of teaching and research experience in Greek, European, and US Universities (on-campus and online modalities). He focuses on continuous improvement, loves precise and accurate data, and is willing to add value to the organization for which he works. He is the owner and the administrator of the website: http://www.thinkingfinance.info, where you can find stuff from his Research, Projects, and Writings.

[1] Asset allocation means decisions on the portion of the portfolio to be exposed to changes in the values of certain classes of assets (Greer, 1997).

[2] A portfolio selection model that allocates financial assets by maximizing expected returns (Campbell, Huisman, Koedijk, 2000).

Publication Title

Social Science Research Network (SSRN)

Publisher

Thinking Finance

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