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The Stewardship of Wealth: Successful Private Wealth Management for Investors and Their Advisors, + Website by Gregory Curtis

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Global Investing in the Real World (or, Maybe, Real Investing in a Global World)

Let's take a look at just a few of the more serious challenges faced by an investor who wishes to adopt a global investing approach.

Is “Global Equities” an Asset Class?

When thoughtful investors design portfolio strategies, they begin with the concept of an asset class. By mixing and matching different asset classes in a sensible way—that is, taking advantage of less-than-perfect correlations among the asset classes—they are able to build portfolios that optimize return per unit of risk. I don't wish to get bogged down in the debate over what constitutes an asset class, but for portfolio construction purposes it is generally useful to divide investment assets into smaller, rather than larger, categories. For example, using as building blocks for a portfolio such categories as U.S. large-cap stocks and U.S. small-cap stocks makes more sense than trying to design a portfolio around one huge asset class called “U.S. equities.” By using the finer definitions, families can tailor the portfolio to their needs much more carefully, and they are also likely to end up with a better-diversified portfolio.

Extending this thought to global equities, I would make the same comment: The term is too broad, too encompassing, to be of much use in the design of investment portfolios. It incorporates all the domestic asset classes mentioned above, as well as non-U.S. large-cap equities, non-U.S. small-cap equities, emerging ...

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