Know the difference between
developed and emerging markets
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    As economic expansion becomes more evenly distributed around the world, in both developed and emerging markets, looking beyond domestic borders may help you find better investment opportunities.

  • International investments are generally separated into two main categories.

    International investments are generally separated into two main categories: developed and emerging markets.
  • Developed Market

    A developed market refers to a country where you would see many similarities with the United States.

    • More economic security
    • Robust industries
    • Stable infrastructure

    Examples of developed market countries:
    United Kingdom, France, Germany and Japan

  • Emerging Markets

    An emerging market refers to a country that isn’t as developed as the U.S. and is where you would likely see:

    • Rapid growth and development
    • Lower per capita income
    • Less mature financial markets

    Examples of emerging market countries:
    Brazil, Russia, India and China

  • Developed and emerging markets may offer valuable opportunities for informed investors.

    Developed markets Emerging markets
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    Varied growth opportunities
    Other developed markets tend to be at different points in the business cycle and offer investors different opportunities for growth.
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    Higher potential growth
    Emerging market economies tend to grow much faster than their developed market counterparts, which can lead to stronger earnings growth.
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    Broader diversification
    Since developed markets all have different policies, advantages and disadvantages, investing in other developed markets offers another layer of diversification.
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    Even more diversification
    Emerging market economies also often perform differently than those in developed markets, so they can offer yet another level of diversification.
  • Developed and emerging markets also include risks you should consider.

    Developed and emerging markets share these risks:
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    Foreign securities risk
    Foreign securities may be more volatile, harder to price and less liquid than U.S. securities.
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    Economic risk
    Another country could see changes in labor, raw materials, inflation or monetary policies.
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    Political risk
    Another country’s government could become unstable, or it could experience political unrest.
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    Currency risk
    Another country’s currency could become volatile and drop in comparison to the U.S. dollar.
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    Risks may be greater with emerging markets, but any additional risks may also be offset by additional opportunities.

  • You should only invest in developed and emerging markets if you and your advisor agree that it aligns with your risk tolerance and long-term investment goals.

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    Talk to your financial advisor about the allocation of international markets that may be right for you.

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    If you don’t already have one, we can help you find a financial advisor.


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International investing

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