How foreign assets in your portfolio can protect it from volatility

Even during the ongoing global market rout, the importance of being internationally diversified has been validated. An Indian investor with exposure to the US market would have enjoyed downside protection over the shorter term and outperformance over the longer term (see table). Once an Indian investor has adequate exposure to the domestic market, he should diversify internationally. “Just as it is a good practice to diversify across sectors and companies, it is important to diversify across markets as well. If you do so, your portfolio will be less affected by risks specific to yo.....

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