The report highlights the benefits of geographic diversification in private equity markets for investors looking to minimize downside risks and participate in global economic growth. The Efficient Company Group, L.P (Bern) uses its Total Portfolio Managerment (TPM) framework to illustrate the potential diversification benefits. The analysis shows that a clear case can be made for geographic diversification in private equity markets, which may help deliver higher risk-adjusted returns compared to a domestic-focused portfolio. The report also highlights an increased exposure to Asia as a key consideration for most investors and that a simple shift towards advanced European economies can help mitigate key inflation risks while potentially maintaining a high level of risk-adjusted returns. However, foreign exchange (FX) risk represents a significant hurdle to investing outside the U.S. and the outlook for the dollar as the reserve currency and the depth of its capital markets are important supportive factors.
