Can We Predict Which Countries Will Perform Best?
By Michael Foster
We at DCA believe global diversification is incredibly important. While we are a US-based business with primarily US-based clients, we also realize the merit in spreading out capital across markets.
Many names we encounter in our daily lives are non-US based companies. If our investments hold Ford and GM, would we also not want to invest in Toyota and Honda? How about Samsung and Sony in addition to Apple and Microsoft? As I’m writing this, I’m drinking from a Nestle water bottle and listening to background music on Spotify, both international companies.
It’s also incredibly difficult, if not outright impossible, to predict what markets will do better than others. Dimensional Fund Advisors has a great chart which shows returns of developed markets over the last 20 years ending 2021. When looking at this chart, I struggle to see any sort of pattern that would lead me to feel confident making predictions on who would perform better than someone else. One thing that sticks out to me is that Denmark had the highest return over the period of the countries listed. The US, despite several strong years coming out of the great recession finished 6th overall. The results get even murkier when adding in emerging markets countries where we also invest.
Source: Dimensional Fund Advisors
In conclusion, we at DCA have a strong belief in global diversification. We don’t pretend to know where returns will come from and want to make sure our clients are able to capture them where they appear. Enjoy the article from Dimensional below.
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Ben Dolan and Michael Foster are investment advisor representatives of Dolan Capital Advisors a North Carolina state-registered investment adviser. Investment advice offered through Dolan Capital Advisors, Inc.