Investing in global equities - Changing determinants of returns.

Accelerating globalization of business enterprise and the integration of capital markets are altering the international equity investment environment. The empirical evidence suggests that security price returns have become more closely associated with industry affiliation than with country of domicile. Within-country comparisons of securities are now a less effective way to identify attractively valued stocks; comparing securities within global industries and across countries appears instead to provide a more powerful approach to identifying future winners. Structural changes like these necessitate a more global approach to equity investing. Plan sponsors, asset managers, and individual investors should respond by altering their investment process to reflect this new economic reality.