Impact of Global Integration on Asset Allocation Decisions

The world has become increasingly interconnected due to globalization, leading to substantial shifts in the investment landscape. As a portfolio manager, you are advising a high-net-worth individual who is looking to expand their investment horizons beyond domestic markets. They have expressed interest in understanding the implications of global integration on their asset allocation strategy. Additionally, they are concerned about the potential risks related to currency fluctuations, geopolitical events, and differing economic cycles in various regions.

Please discuss how global integration influences asset allocation decisions for this client. In your response, evaluate the benefits and challenges of incorporating international assets into their portfolio, and how these factors can impact overall portfolio performance and risk management.