January 21, 2022

Global Diversification Can Make a World of Difference

The US stock market is the biggest in the world, but investors who ignore other global markets may miss out on a wealth of opportunity.

  • Stocks of the roughly 17,500 companies trading outside the US represent nearly half of the world’s $74 trillion equity market.
  • When determining where to invest, a country’s size, population, or gross domestic product may not be a primary consideration. Japan, for instance, is relatively small in landmass but accounts for 7% of the world’s equity market value, representing more than 2,600 companies, including familiar names like Toyota and Sony. Even a tiny country like Switzerland is home to publicly traded giants like Nestlé and two of the world’s biggest pharmaceutical firms.
  • A strategy focused on global diversification captures returns from thousands of companies around the globe and can potentially offset weak performance in one market with stronger returns elsewhere.