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Five reasons to invest abroad

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18/08/2014
The UK economy has been doing a little better of late, but there are still plenty of reasons to consider investing in other regions around the globe.
Five reasons to invest abroad

Most investors still stick with their home market and may be missing out on opportunities abroad.

Diversification

The stock markets of different geographic regions behave differently at various points in the economic cycle, offering a portfolio some protection against volatility in individual markets.

Access to good companies

The UK has its share of great companies, but there are some global leaders to be found elsewhere – investors can get involved with the next Amazon, Nestle, or BMW.

Access to higher growth

There are regions where growth is far stronger than in mature developed markets such as the UK. For example, some emerging markets are growing at 8-10% per year, which creates a fertile climate for companies.

Higher income

This is particularly true for bond markets. In developed markets yields have been pushed down to historic lows and income is scarce. Investors can achieve higher income by investing globally.

The world is your oyster 

The UK is only around three to four per cent of global GDP. Investors who limit themselves to investing in the UK are missing out – quite literally – on a world of opportunities.

But how to do it?
Investors might want to dip a toe in international markets by first investing in international-facing companies listed in the UK. From there, investors may want to look at other major global stock markets, such as those in the US and Europe. From there, they could get more adventurous and build in some exposure to the higher growth markets of the world, such as China or Brazil. Alternative they could pick a global fund manager to do the hard work for them. These can be found in the IMA Global or Global Equity Income sectors.

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