WHY INVEST ON A GLOBAL BASIS

By Philip Stibolt

Why go global? In these days of global geopolitical thought and influence, coupled with economic globalisation, it makes perfect sense for investors to broaden their outlook and break out of their traditional domestic approach to investing. Multi-currency investing provides diversification from US assets, exposure to additional markets and reduces overall portfolio risk The investor will find a broader range of investment opportunities available, such as:

  • Direct Investing in non-US assets (as opposed to using funds or ADR's)
  • Foreign Currency deposits
  • FX Forward transactions
  • Lower interest rate Lombard credit facilities
How does one invest to profit from the economic impact of China or the revitalisation of Japan? The economies of China and India are growing rapidly, how best to participate? By 2010, China wants to DOUBLE its per capita GDP from the level in 2000. European companies are in the midst of constructive corporate restructuring. They are showing profits despite slow economic growth (slow growth does not necessarily translate to weak corporate profit growth.) Additionally, European Union enlargement is bringing in new member states with a cheaper labour force, lower tax rates and higher GDP growth rates. European and Japanese profitability is catching up with the US, and capital will naturally flow to that growth rate.

During the past 20 years, when comparing performances of benchmark indices in the developed markets in US$ terms, we find that Hong Kong, Japan, New Zealand, Canada, Spain, Portugal, Austria, Switzerland, Belgium, Greece, Finland and the UK have at one time or another all held the top rank as best performer. The US has never been the top performer. A globally diversified portfolio will distribute overall portfolio volatility and risk throughout regions whose markets may not move in correlation with the US market.

Why have investment service providers in Switzerland? Switzerland is the largest private banking centre in the world. Of the $5,000 billion assets that Swiss Banks manage, two thirds belong to private individuals; this amount represents 35% of the international private banking business. In a marketplace that has developed rapidly over the years, and spread on a global scale, Switzerland still commands the place of honour with a number of advantages over its competitors:

  • Strong Banking Confidentiality laws governed by the criminal code
  • Unsurpassed reputation as a safe haven
  • Efficiency and Innovation while embracing traditional values
  • Affordability
The strong appeal of Swiss banks is not limited to historical developments or locational advantages. A great deal more is behind Switzerland's success - Switzerland has and continues to offer:
  • A network of internationally competitive banks
  • An attractive and stable political, fiscal and legal environment
  • A client-based investment philosophy
  • A vast know-how in international portfolio management
The information and tools are available for the astute investor to profitably enlarge his investment horizon and exposure.

© 2005 Cobblestone Advisers, LLC
    
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