Investment Enhancment

Investment Enhancement

John Doe

FIN/402

July 27. 2015

Russell Smith

There is any number of ways to invest in markets like there are many ways to gamble in a casino. But unlike a casino an investor doesn't have the option to protect a bet at a table by placing another bet on a different table or betting a range of chips across many tables simultaneously. In the fiscal markets, there are many strategies that allow investors to hedge or mitigate risk on investments. Also unlike a casino, the odds of returns in real markets do not favor the house rather the odds favor those that are vigilant and disciplined.

         International portfolio diversification can be a useful tool that management can add to the value to a portfolio. Portfolio Management and International diversification can generate many benefits.  There are some variables that can be combined to create a well -balanced international portfolio. Foremost as with any investment it should be thoughtfully researched and applicable to modern fiscal measurements. Secondly, reduce risk by focusing on positive returns with a long-term timeline for the investment.  Thirdly, the ability to liquidity the investment for cash if conditions become unfavorable. A manager of a portfolio with international assets courts controversy and can eliminate misunderstanding by developing a solid knowledge base in regards to their portfolios international assets.

With increasing globalization, participating in international markets is more than adding a dimension of diversity to a portfolio it critical to effective allocation and safeguarding of investment funds. According to Forbes contributor Gregg Fisher, "given the lower correlation of returns across countries, it is reasonable to expect that international stock returns can be quite different from US stock returns. But it is this low correlation that produces the large diversification benefit of investing internationally. We continue to believe that global diversification (which includes allocations to gold and commodities) has merit. Our research suggests that, for long-term investment, international diversification can have a favorable effect on portfolio risk and returns"(Fisher, 2012).

Alternative investments are usually complex and held by large institutional investors and sophisticated individual investors. Alternative investments include hedge funds, commodities, managed futures, real estate and derivatives contracts. Alternative investments are popular primarily because they tend to have a low correlation with those of standard asset classes. Pensions and private endowments have begun to allocate a small portion (typically less than 10%) of their portfolios to alternative investments such as hedge funds (Investopedia.com, 2007). Some alternative investment opportunities such as real estate and commodities such as precious metals are widely available and become tools that can be useful in a small investor's portfolio.  Alternative investments usually have minimums, complex fee structures, less regulation, limited performance data and the investor must rely on their individual research.