Benefits of Global Integration in Asset Allocation

Easy Asset Allocation Global Integration

Maria is a portfolio manager for a global wealth management firm. She is reviewing the investment strategies for her clients who have expressed interest in incorporating international assets into their portfolios. Maria is particularly focused on how global integration can enhance portfolio performance through diversification and risk reduction.

Assuming the correlation coefficients between domestic and international asset classes are low, which of the following statements best describes a potential benefit of global integration in asset allocation?

Global integration allows investors to achieve higher returns without increasing risk significantly.

Incorporating international assets ensures that investors will outperform their domestic market regardless of conditions.

Global integration reduces portfolio volatility by incorporating assets with lower correlations to domestic investments.

Hint

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