Looking back at the first half of 2018, investors will notice an interesting trend throughout – during relatively lengthy periods of time, specific sectors of the market will underperform at a rate which could not be anticipated, with other sectors one may consider overvalued or due for a setback, continuing to outperform.
For investors looking to diversify, the work that goes into buying a properly diversified portfolio of stocks can be daunting. The time and energy one spends picking and choosing the best companies out of a sea of good options is discretionary, and in that regard, exchange traded funds (ETFs) do a very good job of providing the level of diversification an investor seeks with minimal investment of time and energy.
With ETFs generally doing such a good job of providing investors what they need, diversifying a portfolio of ETF products has become the new norm for many investors.
Besides buying blanket ETFs that cover a specific index or part of the world, such as the MSCI Emerging Markets ETF (TSX:XIN), investors can choose from a range of ETFs which are focused on different geographical areas of the world to maximize true global diversification like never before.
I would encourage investors looking for passive investment options to consider funds from around the world in addition to North American or domestic ETFs to avoid under-diversifying when the next correction comes.
Invest wisely, my friends.
