Global investing reinvented

What matters most is where companies earn revenues, Capital Group says.

Rudy Luukko 5 February, 2015 | 6:00PM
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Few would disagree that it makes sense to invest globally. Where views differ is on how best to go about it, and how to define diversification.

According to conventional thinking, geographic diversity is based on where the company is domiciled. That's the process by which fund-measurement firms, including Morningstar, collectively determine fund categories in Canada. The Emerging Markets Equity category, for instance, consists of funds that invest at least 90% of their equity holdings in in a broadly based portfolio of securities from emerging-markets countries.

There's another school of thought as to what constitutes going global. It holds that what matters most in diversifying geographically is where a company earns its revenues, as opposed to where its head office is located or on what exchange its stock is traded.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Microsoft Corp308.85 USD0.47Rating

About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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