Evaluating The International Diversification Benefits Of Chinas New Indexes

This article examines the characteristics and performance of selected Chinas financial indexes. Although several indexes were recently made available, this study focuses on three in particular because they are compiled using distinct methodologies. Based on the differences in their composition, they were categorized as either global or investable indexes, herein indexes composed of shares that are readily available for trading in the market. From a portfolio diversification perspective, this study found that U.S. investors seeking exposure to China stand to gain the most from funds tracking the Standard & Poors/CITIC 50 Index (a global index) than from those tracking the FTSE/Xinhua China 25 Indexor the Halter USX China Index (investable indexes). Its risk-return characteristics, along with other performance evaluation measures used, show that it is most efficient in providing international diversification benefits

Reevaluating Portfolio Diversification Benefits With New Multinational Indices

This study reviews international diversification using new sets of global and regional indices of multinational companies. Contrary to previous studies, it can be demonstrated that U.S. investors can aspire to strategically balanced portfolios through positioning in these indices. On might think that, because U.S.- and European -based companies frequently dominate these indices this might lead to poor diversification benefits. After all, one could argue that policymakers from the U.S. and the other major economies are increasingly coordinating their macroeconomic decisions resulting in the same monetary and public policies that affect a portfolio of purely domestic firms. Our results, however, show that it is far from being the case

Assessing the Effect of Investment Barriers on International Capital Flows Using An Expert-Driven System

The analytic hierarchy process AHP is an expert-driven system that has been applied to numerous fields but has yet to be applied to portfolio selection. This study shows how the AHP can be modeled to effectively assess barriers to cross-border investments. It demonstrates that it is capable of effectively contributing to the selection of an optimal investment portfolio OIP, herein a diversified portfolio composed of national markets where barriers to capital flows are least likely to adversely affect its return

Exchange-traded Funds : Investment Practices and Tactical Approaches

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A New Method of Measuring Financial Risk Aversion Using Hypothetical Investment Preferences: What Does It Say in the Case of Gender Differences?

Aversion to risk is one of the main factors driving investment decisions. Studies have been based on either simple decisions in a laboratory setting or real-life decisions viewed in retrospect. The study\u27s main contribution to the literature consists of a new and elaborate method of measuring risk combined with a real-world investment task brought into a laboratory setting and show that in this controlled environment on average women are more risk averse than men. Unlike previous studies, the authors measure risk tolerance in units that naturally map into the risk-return space used by investors, giving them the missing tool to identify the optimal portfolio among the set of investment options that comprise the efficient frontier

Using the Analytical Hierarchy Process to Select a Financing Instrument for a Foreign Investment

The purpose of this paper is to apply the Analytical Heirarchy Process Model in selecting an instrument to finance a foreign direct investment. As with other finance decisions, risk and return are evaluated before the appropriate instrument is chosen. The model allows for several character sets to be evaluated. Included in this analysis are the nature of the investment, the financial instruments available and their characteristics. The set of elements needed to be financed are characterized by the amount and nature of the asset. Relevant factors in evaluating the instruments are: costs of borrowing and risks associated with the instrument. The set of financing instruments to be evaluated include a local institutional loan, international capital market loan, international capital market bond, and internally generated funds. This model, developed by Thomas Saaty (Saaty 1980), can be used to solve multicriteria problems by the use of a subjective scale to quantify decision factors