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business16h ago
How International Investing Still Pays
- A Kellogg study analyzed 27 countries from 1966 to 2022 and built 26 portfolios pairing U.S. stocks with foreign equities.
- The edge comes from isolating country-specific factors from global forces that affect all countries.
- Most portfolios showed higher risk-adjusted profits than U.S. stocks alone, measured by the Sharpe ratio.
- Country-specific factors remained influential even as global markets became more connected.
- The strategy could inform funds and ETFs but is less accessible to typical retail investors due to data needs.
- The study groups country-specific risks with U.S. investments to improve diversification.
- Globalization traditionally linked markets, making diversification harder.
- The authors suggest funds might adopt country-specific-factor frameworks for better diversification.
- The research used 27 countries and a long time span, reinforcing robustness of findings.
- The study is published as a Kellogg Insight feature linked to a working paper.
- The research points to a potential for mutual funds and ETFs to apply the country-specific framework.
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