Multiple country exposure aligns different phases of economic cycles across countries, allowing assets to complement each other across national economic rhythms and cushioning against the shock of any single market’s cyclical swings.
Asset allocation maps economic-cycle phases to different return profiles, while index investing reduces single-stock and single-bond risk and mitigates the principal-agent problems associated with discretionary investment managers.
Through diversification across time and space, investors can enjoy what Harry Markowitz, 1990 Nobel laureate in Economic Sciences, called the “only free lunch in finance,” keeping the portfolio cycle-resilient, broadly diversified, and steadily rising over the long term.