Various research studies have consistently reported on the international diversification benefits and proven that low correlations can increase diversification effects. On the other hand, it has been documented in various empirical studies, that the country by country correlations should substantially increase for world equity markets in an ongoing process of globalisation and that the reported diversification benefits have decreased during the past decades. The practical implication for a portfolio manager that has emerged from these findings will be the challenge to readjust the asset allocation approach to different sectors or non-traditional asset classes.
In this process, the special role of property investments with its unique investment characteristics and its various investment vehicles will have a significant influence on private and institutional investment policy. The traditional reasons for integrating real estate assets into a portfolio have been the assumed low correlations between real estate and the existing bond and stock markets and other special characteristics of real estate investments such as sectoral and geographical diversification effects, higher returns through international real estate investments with higher income yields and a motivation to align international core business operations with corporate investments. International investments can reduce portfolio risk because asset returns in different countries may not be perfectly correlated.
We at Laverne Capital will help you in understanding international property and also guide in getting its thorough knowledge to you so as a consummate asset.