Even if your portfolio is invested entirely in UK companies, you probably have some exposure to foreign economies because the larger companies in your portfolio will be earning revenue from foreign operations.
The question is whether to increase your exposure beyond that level. There are three arguments in favour:
The counter-argument is that it can be difficult to research foreign stocks, there is a currency risk to take into account, emerging markets can be volatile, and the mechanics of dealing can be fussy. To some extent, all of these problems can be overcome by investing in ADRs or in investment or unit trusts.
Most private investors feel uncomfortable investing outside the UK. Hopefully this course will have shown that it does not necessarily entail greater risk and, arguably, is an essential part of risk reduction.
You have now completed the course. To test your knowledge, take the Assessment test.
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