Dying to diversify

One of the most frequent assertions by fund managers across the UK investment press over the last year has been that, while the domestic economy may be set for anaemic growth, UK companies are set to fare a lot better.

This is partly down to strong management, who have created lean and well-run companies, but is also because so many firms derive significant portions of their earnings from emerging market economies. This global diversification has been the saviour of many UK companies, who would have suffered if they had been forced to rely purely on domestic demand for their goods and services. It has also been a godsend for those who rely on their dividends. But the question needs to be asked: how many of those investors who benefitted from this diversification did so by default? The wisdom of dive...