Don’t limit your investments to Singapore stocks!

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.

Chart #1

  • 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

 

Chart #2

  • 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┬ápositive 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

 

Bottom Line

Investing in domestic and foreign equities may enhance your risk-adjusted returns!