Abstract
At first sight, the idea of investing internationally seems exciting and full of promise because of the many
benefits of international portfolio investment. By investing in foreign securities, investors can participate in
the growth of other countries, hedge their consumption basket against exchange rate risk, realize diversification
effects and take advantage of market segmentation on a global scale. Even though these advantages
might appear attractive, the risks of and constraints for international portfolio investment must not
be overlooked. In an international context, financial investments are not only subject to currency risk and
political risk, but there are many institutional constraints and barriers, significant among them a host of tax
issues. These constraints, while being reduced by technology and policy, support the case for internationally
segmented securities markets, with concomitant benefits for those who manage to overcome the
barriers in an effective manner.