Individual investors in the United States may globally diversify their portfolios through the purchase of shares of individual corporations, by investing in American Depository Receipts (ADRs) or the pooling of funds in investment companies, particularly closed-end country funds. This article summarises the performance of both of these types of investments over the period from January 1990 through December 1999. For the period studied, a greater proportion of naively traded, country-specificADR portfolios show better risk-adjusted returns than do the corresponding professionally man aged country funds.
Get full access to this article
View all access options for this article.
References
1.
Aiello, S. and N. Chieffe (1999), 'International Index Funds and the Investment Portfolio', Financial Services Review, 8(1): 27-35.
2.
Bailey, W. and J. Lim (1992), 'Evaluating the Diversification Benefits of the New Country Funds', Journal of Portfolio Management, 18(3): 74-80.
3.
Bailey, W., K. Chan and Y. Chung (2000), 'Depository Receipts, Country Funds, and the Peso Crash: The Intraday Evidence', Journal of Finance, 55(6): 2693-717.
4.
Bonser-Neal, C., G. Brauer, R. Neal and S. Wheatley (1990), 'International Investment Restrictions and Closed-end Country Fund Prices', Journal of Finance, 45(2): 523-47.
5.
Brealey, R. (1999), 'The Asian Crisis: Lessons for Crisis Management and Prevention', Journal of Applied Corporation Finance, 12(3): 111-23.
6.
Chen, G., M. Firth and O. Meng Rui (2002), 'Stock Market Linkages: Evidence from Latin America ', Journal of Banking & Finance, 26(6): 1113-41.
7.
Coe, T. ( 1999), 'Do Closed-end Country Funds Mirror their Home Markets ?', Journal of Emerging Markets, 4(2): 23-42.
8.
Far Eastern Economic Review (1997-99), various issues.
9.
Gruber, M. (1996), `Another Puzzle: The Growth in Actively Managed Mutual Funds', Journal of Finance, 51 (3): 783-810.
10.
Jensen, M. (1968), 'The Performance of Mutual Funds in the Period 1945-1964', Journal of Finance, 23(2): 389-416.
11.
Johnson, G., T. Schneeweis and W. Dinning (1993), 'Closed-end Country Funds: Exchange Rate and Investment Risk', Financial Analysts Journal, 49(6): 74-82.
12.
Levy, H. and M. Sarnat (1970), 'International Diversification of Investment Portfolios ', American Economic Review, 60(4): 668-75.
13.
Mauro, P., N. Sussman and Y. Yafeh (2002), 'Emerging Market Spreads: Then versus Now', Quarterly Journal of Economics, 117(2): 695-733.
14.
Officer, D. and J. Hoffmeister (1987), 'ADRs: A Substitute for the Real Thing?', Journal of Portfolio Management, 13(2): 61-65.
15.
Sharpe, W. (1966), 'Mutual Fund Performance', Journal of Business, 39(1): 119-38.
16.
Strong, R. (2001), Practical Investment Management (2nd ed.). Cincinnati: South-Western.
17.
Treynor, J. (1965), `How to Rate Management of Investment Funds', Harvard Business Review, 43(1): 63-75.
