FIN4516 Innocents Abroad Report
Table of Contents
Case Background 2
Key Findings 2
Recommendations 4
References 7
Exhibits 7
Case Background
This case deals with a matter that all international investors deal with. When a client decides to invest internationally, they run the risk of not only the investment losing value, but also the currency losing value. In the case of Sandra Meyer, it was not about just convincing a client about investing internationally; she had to convince her largest client’s Chief Investment Officer, Henry Bosse. The three (3) main topics Sandra was focusing on were international diversification benefits, currency fluctuations and the possible benefits, and pros and cons regarding the global equity markets and the various correlations. She knew that if she could fully explain those topics, she would be able to convince Bosse to follow through with the international investments. Sandra’s company, CapGlobal, is comprised of herself and six (6) other international investors. CapGlobal served a small number of large institutions by managing their portfolios regarding international allocations. Their methodology was focused on the quantitative models and research in international markets. Normally, CapGlobal gathers data from markets around the world at an individual country level, but for the case of Bosse, they Sandra decided to gather information on both regional and individual country levels.
Key Findings:
She therefore decided to analyze the performance of international and U.S. equities from 1991 to 2013 and also for shorter periods within that period (1991-2001 and 2002-2013).
Included in the analysis are Australia, Canada, China, Germany, India, Japan, and the United Kingdom as well as the U.S.
First monthly return were calculated for each market, and then the average monthly return was calculated.
To simplify the understanding of the analysis, Sandra converted all foreign
Case Background 2
Key Findings 2
Recommendations 4
References 7
Exhibits 7
Case Background
This case deals with a matter that all international investors deal with. When a client decides to invest internationally, they run the risk of not only the investment losing value, but also the currency losing value. In the case of Sandra Meyer, it was not about just convincing a client about investing internationally; she had to convince her largest client’s Chief Investment Officer, Henry Bosse. The three (3) main topics Sandra was focusing on were international diversification benefits, currency fluctuations and the possible benefits, and pros and cons regarding the global equity markets and the various correlations. She knew that if she could fully explain those topics, she would be able to convince Bosse to follow through with the international investments. Sandra’s company, CapGlobal, is comprised of herself and six (6) other international investors. CapGlobal served a small number of large institutions by managing their portfolios regarding international allocations. Their methodology was focused on the quantitative models and research in international markets. Normally, CapGlobal gathers data from markets around the world at an individual country level, but for the case of Bosse, they Sandra decided to gather information on both regional and individual country levels.
Key Findings:
She therefore decided to analyze the performance of international and U.S. equities from 1991 to 2013 and also for shorter periods within that period (1991-2001 and 2002-2013).
Included in the analysis are Australia, Canada, China, Germany, India, Japan, and the United Kingdom as well as the U.S.
First monthly return were calculated for each market, and then the average monthly return was calculated.
To simplify the understanding of the analysis, Sandra converted all foreign
References: International Trade Center. 2014. Top US Imports (Top US Imports). http://www.worldsrichestcountries.com/top_us_imports.html. Retrieved 25 January 2015. Mihir A. Desai, Kathleen Luchs, Elizabeth A. Meyer, and Mark F. Veblen. March 02, 2004, Innocents Abroad: Currencies and International Stock Returns. Harvard Business Review. https://hbr.org/product/innocents-abroad-currencies-and-international-stock-returns/204141-PDF-ENG. Retrieved 25 January 2015. Exhibits Exhibit 1 Exhibit 2