| The purpose of creating the GLOBAA computer program is to achieve an even
greater potential growth by investing in many global markets at the same time.
Doing this provides a greater level of diversification and, if the Efficient
Frontier work by Markowitz and others continues to hold true, it will provide
for increased portfolio performance as well.
A broad market index --- the S&P 500, for example --- represents a
diversified universe of companies, as does a mutual fund designed to mirror the
index. Global investing adds yet another level of diversification by
investing in a mix of mutual funds and index funds that cover the developed
countries of the world. A 20 year performance plot of Global Funds vs
S&P 500 Index Funds shows, for long term, that global investing increases
performance - see plot below ; data from Lipper-Equity Fund Performance
Analysis.
|
