How investors can enter new markets and the questions they should ask their custodian

Abstract

For investment managers and asset owners, investing in global markets is an important source of diversification and alpha. Even for passive investment managers who seek to replicate an index, gaining access to markets around the globe is an important component of executing their investment strategies. From an oper­ational perspective, global market entry is a complex web of jurisdictions, local market conventions and regulatory requirements. How do investors gain sufficient understanding of local markets and how can they adequately assess the operational risk of investing in such markets? This raises another question: who should make the decision regarding country selection, the investment manager or the global custodian?