Currency controls, which restricts or delays conversion, clearing, reporting or settling trades might affect the returns in some countries.
Higher costs. Direct international investments could incur greater commissions, fees, stamp duties, foreign currency fees and transaction levies. Thus the international mutual funds or ETFs are costlier than the similar domestic options (Gibley, 2012).
Hence we can conclude that there are varied impacts on the returns and risks in the international market from both international equity as well as international bonds. The international equity and international bonds hence must not be treated the same as those in the domestic market as they have very different risk profiles. These risks can be estimated by calculating the risk premiums related to the given country according to various information available online. Normally, it could be said that the investment in International bonds or equities in the emerging economic markets attracts higher risks than those in the developed markets across the world.
In the past few years in investment management, the firm investing returns have gained much importance because of few mutual funds which have started with the promise of targeted absolute returns. Thus it has become a conception that ‘Beta’ is dead. The traditional mutual funds aim to make higher relative returns on investment through the method of contrary. These returns are expected to be higher than reasonable standard returns. The aim of the absolute returns is to show margins in the full time periods and across greater variety of market states. As per Pankin (2008), give example of a case that is in the entire year while the drop in the stocks was by 10%, a typical mutual fund which gives relative returns target could be considered to have a good year with drop only by 7%, which in fact could be very bad absolute returns. However, in case there is increase in the market by 15% per year, the absolute returns for a fund could be 10%, which are persistent with its goal when evaluated as compared to the relative returns might show a very bad year of operation for that fund.
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