Diversification is something which we talk about everyday. Yet we miss taking advantage of it in many aspect.
Geographical diversification means having some part of our asset must be allocated into various geographical market. This reduces our risk of depending completely with home economy and also provide cushion of global investment & currency diversification.
Every economy has some unique characteristics and so it has its own inherent market cycle. So when we allocate to any other country (popularly US, Europe, South Korea and Japan etc.), we actually reduces standard deviation of portfolio. This help us to reduce volatility.
That's why expert suggest a small portion of your portfolio should allocated in global market.
