Have you invested in foreign equities? If not, maybe it’s time for you to broaden your scope of investments.
The following 2 charts fully illustrate why you should not limit your investments in Singapore stock market only.
- This chart shows the MSCI returns (in SGD terms) for the various Asian markets in 2016
- It is apparent that the Singapore market did not provide the highest returns during the period
- As each country has its own specific risk characteristics (e.g. political uncertainty), investing in a portfolio of domestic and foreign equities may aid in diversifying the risks
- This chart shows the currency performance of selected Asian currencies in 2016
- As you can see, foreign currency movements can give you an additional boost on returns
- If you have a view on currency, you may achieve positive gains on your foreign investments on currency appreciation
- For example, investing in a US stock in 2016 could yield 2.1% returns even if the share price was flat during the period
Investing in domestic and foreign equities may enhance your risk-adjusted returns!