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Why does geographical diversification matter?

The economies of various countries around the world typically grow at varying paces and react differently to global events. Some regions rely on technology, while others focus on traditional industry. By diversifying, you have the opportunity to tap into growth in multiple markets and to reduce the risk of your investments.

The idea of geographical diversification is summed up by the saying “don’t put all your eggs in one basket”. By spreading your investments across different regions, you can lower your portfolio’s risk level and reduce the impact of fluctuations occurring in individual markets. At the same time, you can gain protection against currency fluctuations, climate disasters and political upheavals, for example.

Explore regions that interest you and the funds that invest in them

Examples of regional crises that have had a strong impact on the regional economy and the value of investments:

  • The war in Ukraine disrupted European markets, especially the energy sector.
  • The tsunami in Japan caused disturbances in the local economy and infrastructure.
  • Hurricane Katrina affected oil production in the Gulf of Mexico as well as the insurance and real estate sectors.

It is difficult to predict the future success or crises of an individual region. Geographical diversification helps keep risks and returns under control, allowing you to tailor your investment portfolio to suit your own goals.

Neutral diversification

  • North America 50%
  • Europe 15%
  • Finland 15%
  • Emerging markets 15%
  • Japan 5%

These are the recommendations of Nordea Asset Management for diversification across the different regions in the world in a basic scenario. The regional weights may change as the markets fluctuate.

Read our weekly report to stay updated on the global markets and their latest developments.

Global

Global diversification can give you access to the return potential of the growing emerging markets while adding balance to your portfolio from the developed markets.

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Europe

Europe is a diverse region, where you can find investment opportunities in large and small economies alike, as well as strong industries and promising innovations.

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Emerging markets

The emerging markets have traditionally moved at a different pace than the developed markets, potentially offering a diversification advantage because of this. This diverse collection of markets offers you the chance to invest in growing economies with a young population and an increasingly affluent middle class.

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North America

By investing in North America, you gain access to the world’s largest and most dynamic economy that boasts technological innovation and a stable corporate culture.

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Asia

By investing in Asia, you gain access to rapidly growing economies and vast consumer markets. As the growth centre of the world, Asia can offer many opportunities on both the emerging and developed markets.

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Japan

By investing in Japan, you can take advantage of the opportunities presented by an advanced economy and the expertise of world-class companies. This highly export-driven market differentiates itself from the rest of Asia, potentially offering valuable diversification to your investment portfolio.

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Nordic countries

The Nordic countries offer a stable and innovative environment where businesses focus heavily on corporate responsibility and sustainable development. By investing in the Nordics, you can benefit from transparent governance, strong investor protection and diverse sectors.

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Finland

Our domestic market gives you the opportunity to invest in an innovative and export-driven economy. Finnish companies boast excellent technological expertise, transparent operations and diversity, ranging from the financial sector and manufacturing to a rapidly growing startup ecosystem.

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Some of our passive funds that invest in different regions

Management fee 0,37 %
Skyscrapers in the big city

Global Passive

The fund tracks the performance of the global equity markets. The benchmark index is MSCI World Net Total Return.

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Management fee 0,37 %

USA Passive

The fund tracks the performance of the US equity markets. The benchmark index is MSCI USA Net Total Return.

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Management fee 0,37 %

European Passive

The fund tracks the performance of the European equity markets. The benchmark index is MSCI Europe Net Total Return.

Read more and buy fund units

Management fee 0,37 %

Finnish Passive

The fund tracks the performance of the Finnish equity market. The benchmark index is OMX Helsinki Benchmark CAP GTR.

Read more and buy fund units

Important information about investing

The information provided on this website is intended as general product information only and does not constitute investment advice or recommendations. The return on your investment may fluctuate, and you may lose some or all of your capital. Past performance is not a guarantee of future results. We recommend that you read the fund’s Key Investor Information Document before making any investment decisions. This page contains marketing content.

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