Investors Look Abroad11.10.2011
As the global markets become more interconnected, investors are increasingly turning toward foreign and emerging markets.
Portfolio diversification and risk management are as relevant as ever in the wake of the MF Global collapse. Many investors, particularly institutions, are looking abroad in an effort to broaden their exposure.
“It’s the way of the world, the whole business is global now,” David Grayson, co-founder and managing director of Auerbach Grayson, told Markets Media. “The world, no matter where you are, functions through the speed of the internet and television. Because of that, individuals and institutional investors are able to execute and invest on virtually any company publically traded in the world.”
In a market economy that is as interconnected as it is today, it is paramount that investors take advantage of the opportunities available to them. Many are diversifying their strategies to not only include different domestic asset classes but are also including exposure in foreign securities.
Auerbach Grayson is a New York-based, agency only broker-dealer that trades strictly international securities for institutional clients. Its customers have access to the markets around the world through partnerships with brokers in each market. Essentially, through these relationships, Auerbach Grayson becomes the foreign broker’s U.S. office and partner, for purpose of selling the local country’s securities. In return, the foreign partner gets access to Auerbach Grayson’s 500 institutional clients, comprising about 2,500 portfolio managers and analysts, customers in the U.S. that they would not otherwise have access to. It currently has alliances with about 128 brokers worldwide. Its latest partnership, with 135-year-old U.K. broker Panmure Gordon, was announced Tuesday.
But with the recent collapse of MF Global, there are renewed concerns about investors having excess exposure in European securities, amid the ongoing debt crisis. However, some assert that this was an anomaly and not the norm.
“Most brokers were already somewhat risk averse, this was aberration,” said Grayson. “You had one person that came in trying to replicate something that had been done before and it backfired.”