RT Journal Article
SR Electronic
T1 Do BRICS Emerging Markets Offer Portfolio Diversification Benefits?—Implications for Developed Markets
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 104
OP 119
DO 10.3905/jwm.2022.1.185
VO 25
IS 3
A1 Ritesh Patel
YR 2022
UL https://pm-research.com/content/25/3/104.abstract
AB The objectives of this article are to: 1) examine the short-term and long-term integration among the emerging markets and developed markets, and 2) evaluate the benefits of portfolio diversification for the investors of developed countries. Results of correlation and Granger causality found a lack of short-term integration among the markets. The co-integration test reveals a lack of long-term strong integration among the market returns and it also indicates the scope of portfolio diversification for investors. Investors involved with developed markets can have a better Sharpe ratio, higher returns, and lower risk through the diversification of their portfolio as compared to investing in just their home markets. Among all the diversification strategies, the maximum Sharpe ratio is the most rewarding strategy. Investors can enjoy gains in the risk-return tradeoff and in their wealth by diversifying their portfolios.