Why Invest Globally?
More than 75% of global economic output and over half of the world’s equity market capitalization come from countries outside the US.* And yet, typical US investor portfolio allocations continue to be biased toward domestic securities.
A strategic allocation to international securities can help enhance a portfolio’s risk-adjusted returns, provide portfolio diversification and offer opportunities for higher performance – factors that have led many investors to acknowledge the need to reduce home country bias in their portfolios. This trend is particularly prevalent amongst institutional investors, where pension plans in developing markets have steadily decreased their home country concentrations over time (see below).
Sources: Pensions & Investments (US), Pension Fund Association (Japan), SSgA, Greenwich Associates (UK), BlackRock 2009.
While gaining exposure to international securities can be operationally difficult and costly with traditional instruments, iShares ETFs give investors efficient, low cost access to the world’s fastest growing economies.
*Sources: Data on world GDP and market capitalization from World Bank, as of 12/31/11