International index funds and the investment portfolio
DOI:
https://doi.org/10.1016/S1057-0810(99)00029-3Keywords:
Index funds, Individual investors, International indexesAbstract
Financial advisors often recommend that investors diversify their investments internationally and also use mutual funds with the lowest expenses. Recently it has been possible to use both of these strategies by purchasing an international index fund. This study considers international index funds as a means of portfolio diversification. Performance is evaluated using monthly return data on nine international indexes from January 1989 through December 1997. Returns are measured against the S & P 500 index returns. The results of statistical tests suggest that international index investing does not offer superior returns compared to the S & P 500 index but diversification benefits do exist. © 1999 Elsevier Science Inc. All rights reserved.
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