Page 40 - Demo

%u062c%u0645%u064a%u0639 %u0627%u0644%u062d%u0642%u0648%u0642 %u0645%u062d%u0641%u0648%u0638%u0629 %u0640 %u0627%u0625%u0644%u0639%u062a%u062f%u0627%u0621 %u0639%u0649%u0644 %u062d%u0642 %u0627%u0645%u0644%u0624%u0644%u0641 40 %u0628%u0627%u0644%u0646%u0633%u062e %u0623%u0648 %u0627%u0644%u0637%u0628%u0627%u0639%u0629 %u064a%u0639%u0631%u0636 %u0641%u0627%u0639%u0644%u0647 %u0644%u0644%u0645%u0633%u0627%u0626%u0644%u0629 %u0627%u0644%u0642%u0627%u0646%u0648%u0646%u064a%u06294- International Diversification through American Depository ReceiptsForeign stocks are traded on U.S. exchanges as ADRs, and global exchanges as GDRs. Adding ADRs or GDRs to domestic portfolios has substantial risk reduction benefits. There are many advantages to using ADRs and GDRs to diversify international portfolios than investing directly in foreign stocks. ADRs and GDRs and their dividends are denominated in U.S. dollars. A local investor can diversify his portfolio internationally using ADRs and GDRs in his local market, through any broker, and without being exposed to the exchange rate risk.5- International Diversification with Hedge FundsUnlike traditional mutual funds that typically rely on %u201cbuy and hold%u201d strategies, hedge funds have the flexibility to use a wide range of tools %u2013 from short-selling and derivatives to leverage %u2013 enabling them to potentially produce returns that are less correlated with overall market movements.These funds can invest in various local and international securities, such as currencies, domestic and foreign bonds and stocks, commodities, real estate, and more.Home Bias in Portfolio HoldingsDespite the advantages we mentioned previously, many investors prefer to invest in local stocks over foreign stocks, which is called home bias. Home bias refers to the degree of concentration of domestic equities in an investor's portfolio.The question now is: what are the reasons behind this bias towards local portfolios despite the advantages of international diversification?%uf06c Some possible explanations for this are 16:1. Domestic equities may be better able to provide a local inflation hedge.2. Additional transaction costs and taxes on investing in foreign markets make investors prefer local investments.3. Home bias may be due to legal restrictions on investment in foreign markets.16 --Eun, C. S., & Resnick, B. G. (2012). International financial, edition Six, McGraw Hill.