chapter  11
16 Pages

Portfolio Optimization and Emerging Markets

ByTheodore M. Theodore

This chapter investigates the challenges of finding the best portfolio mix between emerging-country stocks and U.S. stocks. The hope is that the process will yield results that fulfill the promise of diversification: to improve the risk/return experience of a portfolio by holding multiple assets, compared with that which is possible by holding either asset alone. In fact, many have claimed that the use of foreign stocks will provide these benefits in abundance.