Exchange Traded Funds

In today’s global marketplace, doing business abroad has become as common as getting dressed each day. Technology has bridged the gap for entrepreneurs and corporate visionaries to expand into global markets with ease. Extensive risk analysis and market research must be communicated effectively to enable strategic financial steps that maximize shareholder equity and minimize company risk and exposure to be exercised. This paper will identify and discuss various factors that will impact global finance over the next 10 years

The goal of this case is to help Sandra Meyer develop a presentation to address Henry Bosse’s concerns about international investments. The general idea is to demonstrate to Henry the benefits of international diversification, if any. To achieve this goal, you need to have a view on 1) the impact of foreign exchange (FX) rates on the return and risk of international investments, and 2) the impact of having more assets on the return and risk of the investment portfolio To form views on these two points, answer the following questions: I. The impact of FX rates on the risk and return of foreign investments 1a) Using data in Appendix A, calculate the

Advisors and investors would do well to pay as much attention to the expected volatility of any portfolio or investment as they do to anticipated returns. Moreover, all things being equal, a new investment should only be added to a portfolio when it either reduces the expected risk for a targeted level of returns, or when it boosts expected portfolio returns without adding additional risk, as measured by the expected standard deviation of those returns. Lesson 2: Don’t assume bonds or international stocks offer adequate portfolio diversification. As the world’s financial markets become more closely correlated, bonds and foreign stocks may not provide adequate portfolio diversification. Instead, advisors may want to recommend that suitable investors add modest exposure to nontraditional investments such as hedge funds, private equity and real assets. Such exposure may bolster portfolio returns, while reducing overall risk, depending on how it is structured. Lesson 3: Be disciplined in adhering to asset allocation targets. The long-term benefits of portfolio diversification will only be realized if investors are disciplined in adhering to asset allocation guidelines. For this reason, it is recommended that advisors regularly revisit portfolio allocations and rebalance

“The Benefits of diversification are clear. Portfolio theory has played a crucial role in explaining the relationship between risk and return where more than one investment is held. It also enables us to identify optimal and efficient portfolios.”

commercial real estate markets (e.g., Chan, Hendershott, and Sanders, 1990, Ling and Naranjo, 1996, 1999, Ling, Naranjo, and Ryngaert, 2000, and Karolyi and Sanders, 1999).3 In an international context, several studies have found that continental and country specific factors, such as exchange rate risk, are additional sources of systematic risk (e.g., Eichholtz, et al., 1998, and Liu and Mei, 1996). Therefore, to appropriately measure both domestic and international real estate return performance, it is necessary to adequately control for country specific sources of systematic risk. To form a base-line, we first examine the ex post return performance of each country’s real estate securities using a single-βeta asset pricing model. Our proxy for the world wealth portfolio (i.e., systematic risk) is the total return on a broad-based index of international stocks. The estimated (Jensen’s) alphas from these regressions provide direct evidence of abnormal riskadjusted return performance. In addition, the estimated βeta coefficients and coefficients of determination provide evidence on the extent to which country specific real estate returns respond to a global market risk factor. If returns on real estate securities in country i are heavily influenced by a world-wide risk factor, this may suggest that investors already diversified internationally with stocks will gain little additional

X- C. The composition of the optimal international portfolio is identical for all investors of a particular country, whether or not they hedge their risk with currency futures

The goal of this paper is to explain why CCM’s aggressive program is a good alternative to any investor looking to diversify its portfolio. The paper will be divided into three distinct parts: the operational analysis, the quantitative analysis and a comparison against its peers (including the impact of CCM in a traditional portfolio).

Many changes have transcribed in the global market since the years of 2008-2009, the years of what could be dubbed as the “Second Great Depression”. The changes made have been of significant impact as the market has had to accommodate or regulate a great quantity of systems that range from the advancement of technological platforms in the compartment of information technology to the increase in demand of less common forms of energy being established by major corporations such as Tesla’s Powerwall home batteries. The increase of applications via phones have even made it easy for investors, even novice investors, to buy shares in stock markets at an international scale with a push of a button, taking great advantage of what the globe offers in

The Investment Office made international private equity investments with much precision and caution. Foreign equities were a good source of diversification, since potential returns had less correlation with the U.S. equity market and there were fewer funds competing for deals. Yale’s initial strategy of foreign equity investments was mostly concentrated in France and England, but recently switched their focus towards more emerging markets in Asia, Latin America, and Eastern Europe, in an attempt to find potential undervalued securities due to the less efficient markets in these areas. Also, these emerging markets were growing much more quickly than markets of developed countries. Yale believed that despite the threats associated with newer, riskier markets, the rapid rate of growth allowed for loftier returns. Yale employed seven active emerging markets managers and were broken down as follows: one investing in large US-based equities, one investing in small London-based emerging markets, one investing in African emerging markets, one investing in Chinese emerging markets, one investing in Eastern Europe emerging markets, and two investing in Asian emerging

The correlation between the market portfolio and HML and the correlation between intercept and HML is -0.335 and -0.070, which indicates a moderate negative relationship between market portfolio and HML, and weak negative relationship between intercept and HML. Also, the correlations between the market portfolio and SMB, and between the SMB and HML are 0.348 and 0.191 respectively, which means that there are some positive relationships between them.

Diversification of risk is not putting all your money into one thing, such all putting your money into all bonds. You can diversify your investments by investing in different things such as international stocks, DJIA, bonds, and different types of stocks.

Diversity investment among stock markets, bounds and nationally and internationally is the best me method of maintaining the risk of investment and expanding its growth. The fourth importance is the cost of single investment; the less money an investor pay; the more financial resources will have to take advantage on future investment opportunities that expand the return. Becker’s final advice of investment success was for investors to slick with their plan. “Lethargy bordering on sloth remains the cornerstone of our investment style”, Warren Buffett. Many investors get influenced by what goes around them and the media to end their investment prematurely or get involved in risky commitment outside of their goals.

A new kind of financial investment in the North American markets (Sapp, 2010, p. 4)

Understanding market risk is crucial in determining the factors that threaten one’s ability to attain returns from a particular project, single stock, or a portfolio. The impact of market risks is crucial to determining stability and the return on an investment. Many factors impact the market risk which effect both global and country economies. Market risk allows a firm to estimate the risk and return on projects or investments. Generally the riskier the project, the higher the returns. Market risk is predictable over time; although the predictions are not perfect, one can gain understanding into the effects the market will have on investment or how the investment will react to

International portfolio diversification gives your investments a passport to added diversification benefits. The international boundaries to investing have collapsed. Fairly recently, foreign securities have become easier to trade due to improved communications and data