What investment approach can help reduce country-specific risks?

Investing globally is an effective strategy for reducing country-specific risks. Country-specific risks refer to the potential for losses due to economic, political, or social instability that can affect investment returns within a particular country. By diversifying investments across different countries and regions, investors can mitigate the adverse effects that a downturn in one country may have on their overall portfolio.

When an investor spreads their investments internationally, they benefit from exposure to various economies, each governed by different political environments and economic conditions. This diversification can balance out the risks; if one country's market is performing poorly, gains in another country can potentially offset those losses. Additionally, global investing allows for capturing new and emerging markets that may present growth opportunities that are not available domestically.

In contrast, investing solely in domestic properties or limiting investments to specific types of assets, like government securities or bonds, concentrates risk. Such strategies can expose an investor to the unique economic and political conditions of only that country, without the protective benefits that come from a well-diversified global portfolio.