Have you found yourself asking, “Who cares about diversification? Shouldn’t I put everything in the US market?” Here are a few reminders as to why we go global with our clients.
It’s no secret the US market has performed exceptionally well over the past several years. Still, as the saying goes, you shouldn’t put all your eggs in one (market) basket.
- The US market hasn’t been the best performer this year. Sweden, Denmark, Finland, Ireland, and Norway all outperformed the US market in the third quarter of 2020, with Sweden pulling ahead of the US by almost 8%. In fact, over the past year, Sweden has outperformed the US market by 12.7%.
- There’s no reasonable way to predict which country’s market will outperform and when. Less than a year ago, Finland, for example, went from the third worst-performing market to the third-best market this past quarter.
- Guessing wrong could have a significant impact on returns. The difference between the best performing developed market (Sweden) and the worst-performing market (Portugal) was 20.7%. The gap was even wider amongst emerging markets, with 30.5% separating India at the top of the list and Turkey at the bottom.