Adding Emerging Markets Stocks to a Developed Markets Portfolio? A Linked Model Can Help Manage the Risk (Qontigo)

This is the third installment of a series of Qontigo posts highlighting the risk-measurement benefits of a model that links separate regional models, versus a single global model. In the first installment, “Capturing Regional Nuances with a Global Linked Model,” Qontigo took the point of view of a risk manager of a multimanager portfolio and to show how a linked model can highlight differences in regional exposures that might get lost in a single global model. In the second post, “A ‘Link’ to Better Global Risk Forecasts,” Qontigo illustrated the benefits to risk forecast accuracy of a linked model over a global model when optimizing a global Momentum portfolio. In this post Qontigo address another portfolio management strategy: allowing a portion of a portfolio to be invested outside the geographic region covered by the benchmark. READ MORE

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