Another consideration is the ability to hedge away currency fluctuations through a global portfolio. Although this can help smooth revenue streams, foreign exchange can be a diversifier for an investor’s portfolio.
Two further points I’d make are the need for some allocation to emerging markets. Clearly volatility is greater in these countries, but they have also delivered higher average returns. A lack of correlation to developed markets makes a small allocation through a number of countries an attractive proposition. The final point is income – simply put the UK is the leader in this space, but it is heavily dependent on a handful of leading players for dividend yield. Going global offers greater diversification but also, crucially, the potential for greater income growth from countries where company dividend payments are less mature.
Those wanting global equities exposure may want to consider a style agnostic vehicle like Fidelity Global Special Situations, a portfolio of around 100-150 holdings, which is unlikely to have large country or sector bets but has excellent long-term performance. I also like the conservative style of the JOHCM Global Opportunities fund, which focuses on capital preservation and can hold up to 20 per cent in cash if manager Ben Leyland feels there are simply not enough opportunities in the market. A couple of high conviction portfolios investors may also want to consider include Lazard Global Equity Franchise or the Brown Advisory Global Leaders fund.
*Source: FE Analytics, returns in pounds sterling, figures from 19 October 2012 to 20 October 2022
**Source: Fidelity.com
***Source: Vanguard - Global Equity Investing: The benefits of diversification and sizing your allocation
****Source: MSCI AC World Index – figures to 30 September 2022
