The International Diversification Fallacy of Exchange-Listed Securities

Authors

  • Judson W. Russell Sr. Research Associate, Bank of America, 121 West Trade Street, 1lth Floor, Charlotte, NC 2 8 2 5 5 ; Phone: (704) 388-1007

DOI:

https://doi.org/10.1016/S1057-0810(99)80005-5

Abstract

This paper reviews various investment vehicles and examines their international diver- sification potential. The primary focus is on the ability of U.S. exchange-listed investments such as closed-end country funds, American depository receipts (ADRs), and multinational corporations (MNCs) to provide a diversification effect similar to direct investment inforeign equity. The results show that the U.S. exchange-listed securities included in this study behave more like the host exchange than their home exchange. This result suggests that these U.S. exchange-listed securities, on average, donotperformaninternational diversification rolefor U.S.investors.

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Published

1998-06-30

Issue

Vol. 7 No. 2 (1998): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1998 JAI Press Inc.

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How to Cite

The International Diversification Fallacy of Exchange-Listed Securities. (1998). Financial Services Review, 7(2), 95-106. https://doi.org/10.1016/S1057-0810(99)80005-5