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Introduction
Investing in overseas equities gives investors greater opportunities for reward, diversification and risk reduction. Adding overseas investments (US stocks for example) enables investors to benefit from diversification benefits. Similarly, choosing to invest in foreign companies which have significant operations overseas may help to achieve greater rewards. It is YTM Stockbrokers aim to provide our investors with a greater range of investment opportunities.
Political Risk
Investors looking to profit from overseas investments can make use of economic opportunities which may arise due to changes in political circumstances (emerging markets for example). It must also be kept in mind that adverse political events could have detrimental effects to the value of their investments (geo-political disputes or changes in tax regimes for example).
Currency Risk
When considering the return from overseas investments, one should always look their potential return expressed in domestic currency terms. Change in foreign exchange rates will always influence the overall return achieved from any overseas investment. For example, if money must be converted to another currency to make a certain investment, then any changes in the currency exchange rate will cause that investment's value to either decrease or increase when the investment is sold and converted back into the original currency.
Summary
YTM Stockbrokers will, all times, advise customers of the risk associated with any overseas investment.
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