TY - JOUR T1 - International Diversification: <em>The Weighting is the Hardest Part</em> JF - The Journal of Portfolio Management SP - 53 LP - 62 DO - 10.3905/jpm.2015.42.1.053 VL - 42 IS - 1 AU - Charles Braymen AU - Robert R. Johnson Y1 - 2015/10/31 UR - https://pm-research.com/content/42/1/53.abstract N2 - Many traditional, international diversification approaches do not address the influence of economic integration and corresponding market correlations across countries. The authors develop a trade-adjusted weighting methodology that reduces the effect of economic integration on portfolio performance. Results demonstrate that the trade-adjusted portfolio outperforms a GDP-weighted portfolio in terms of risk-adjusted returns. Likewise, the trade-adjusted portfolio’s performance exceeds that of an equally weighted portfolio in most risk-adjusted measures. These results provide a strong argument for investment managers to use trade-adjusted weightings in forming portfolios and developing financial products.TOPICS: Global, portfolio construction, portfolio management/multi-asset allocation ER -