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International Variations in the Benefits of Feasible Diversification Strategies

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  • Wan-Jiun Paul Chiou

    (Finance Group, Northeastern University, 360 Huntington Ave., Boston, MA 20115, USA)

  • Vigdis W Boasson

    (Central Michigan University, Mt Pleasant, MI 48859, USA)

Abstract

We examine the international variations in portfolio diversification benefits from an angle of global wealth management. We directly model the impact of widely observed phenomenon, home bias and no short-sales, on international investments with the aim to establish feasible diversification strategies and to identify which countries and/or regions are target markets for wealth management. Our results indicate that investors in less developed countries, particularly in East Asia and South Asia, reap greater benefits from international diversification than investors in the rest of the world. These benefits are particularly noticeable in volatility reduction. Our results reveal important insights for global wealth management.

Suggested Citation

  • Wan-Jiun Paul Chiou & Vigdis W Boasson, 2015. "International Variations in the Benefits of Feasible Diversification Strategies," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-38, December.
  • Handle: RePEc:wsi:rpbfmp:v:18:y:2015:i:04:n:s0219091515500228
    DOI: 10.1142/S0219091515500228
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    Cited by:

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    2. Sulaiman Al-Jassar & Imad A. Moosa, 2020. "Country Effects, Industry Effects and the Effectiveness of International Diversification Within the GCC Region," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-18, January.
    3. Patrick Bielstein & Matthias X. Hanauer, 2019. "Mean-variance optimization using forward-looking return estimates," Review of Quantitative Finance and Accounting, Springer, vol. 52(3), pages 815-840, April.

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