Global Asset Allocation and Diversification

Easy Asset Allocation Global Asset Allocation

In the context of global asset allocation, an investor is considering a diversified portfolio that includes equities, fixed income, and alternative investments across various geographic regions. The investor expects that emerging markets will present significant growth potential compared to developed markets. However, the investor is also concerned about the higher volatility and risks associated with these emerging markets.

Given this scenario, which of the following statements regarding global asset allocation is most accurate?

Emerging markets typically offer lower returns due to their higher volatility.

Diversifying across geographical regions can help mitigate risks associated with emerging markets.

Global asset allocation eliminates all risks associated with investing in emerging markets.

Hint

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