What are the benefits of international investing?
Diversification
Diversification is often cited as one of the biggest benefits of international investing. By holding assets in different geographic regions, investors can reduce reliance on any single economy. So, if the UK experiences a period of slower growth, strong performance elsewhere, such as in the US or India, can help offset local volatility.
A globally diversified portfolio may therefore be better positioned to withstand regional downturns and benefit from growth wherever it arises.
Discover top tips to diversify your investment portfolio.
Reduced home bias
Home bias describes the tendency to invest primarily in domestic companies.
While familiar brands can feel more comfortable, over-concentration can limit potential returns. UK markets, for instance, are heavily weighted towards financials, energy, and consumer staples, with limited exposure to fast-moving technology or biotech sectors.
Expanding internationally can help reduce this bias, giving investors access to markets with different economic drivers and compositions.
Access to fast-growing sectors and markets
Some of the most dynamic areas of the global economy, such as renewable energy and artificial intelligence, are led by companies based outside the UK. Through global investing, investors can gain exposure to these emerging sectors and to regions experiencing rapid industrialisation – particularly in Asia and Latin America.
Accessing these markets can also provide participation in themes that may shape future growth, from green infrastructure to digital innovation.
Potential currency gains
Exchange rates can add an additional source of return (or risk).
If the sterling weakens against the currency of your overseas holdings, the value of those assets may increase when converted back into pounds. Conversely, a stronger pound can reduce returns from abroad.
Some investors hedge currency exposure with specific financial instruments, while others accept this volatility as part of a long-term global diversification strategy.
Broader investment opportunities
The international stock market offers a huge range of opportunities. Thousands of listed companies operate across diverse economies, from established blue chips in developed markets to up-and-coming enterprises in emerging ones. This broader universe means investors can tailor portfolios to their interests – whether that’s sustainable energy, consumer growth, or healthcare innovation.
