Understanding Global Integration in Asset Allocation

Medium Asset Allocation Global Integration

Alice is a portfolio manager at a global investment firm. She is currently evaluating her client's diversified investment portfolio and considering the implications of global integration on asset allocation. In her analysis, she focuses on how interconnected global markets can influence asset performance. Alice notes that understanding the benefits and risks of global integration is essential for formulating an optimal asset allocation strategy that maximizes returns while controlling for risk.

Which of the following statements is most accurate regarding the role of global integration in asset allocation decisions?

Global integration reduces the benefits of asset diversification, as assets in different markets tend to move in sync.

Global integration allows for improved risk management by facilitating access to a broader range of investment opportunities.

Global integration guarantees higher returns, regardless of the specific asset allocation strategy employed.

Hint

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