Countries versus Industries in Emerging Markets: A Normative Portfolio Approach

14 Pages Posted: 13 May 2004  

Javier Estrada

IESE Business School

Mark Kritzman

Windham Capital Management

Sebastien Page

State Street Associates

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Abstract

Should investors in emerging markets focus on diversifying across countries or diversifying across industries? This question, widely debated in developed markets, and particularly in Europe, has received little attention in emerging markets. Using a normative approach that disentangles the impact of investor behavior from the opportunities offered by capital markets, we find that country effects dominate industry effects. It follows from our results that, despite the increasing globalization of emerging markets, investors should focus their diversification efforts on countries rather than on industries.

Suggested Citation

Estrada, Javier and Kritzman, Mark and Page, Sebastien, Countries versus Industries in Emerging Markets: A Normative Portfolio Approach. EFMA 2004 Basel Meetings Paper. Available at SSRN: https://ssrn.com/abstract=500048 or http://dx.doi.org/10.2139/ssrn.500048

Javier Estrada (Contact Author)

IESE Business School ( email )

IESE Business School
Av. Pearson 21
Barcelona, 08034
Spain
+34 93 253 4200 (Phone)
+34 93 253 4343 (Fax)

Mark Kritzman

Windham Capital Management ( email )

5 Revere Street
Cambridge, MA 02138
United States
617-576-7360 (Phone)
617-576-7359 (Fax)

Sebastien Page

State Street Associates ( email )

138 Mount Auburn Street
Cambridge, MA 02138
United States
617-234-9462 (Phone)
617-234-9478 (Fax)

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