The head of a local independent investment and financial services firm has cautioned investors against dispersing investments solely throughout the Caribbean.
Gregory Hinkson, managing director of Samdor Services Limited, stressed that in order to achieve a truly diversified portfolio, some investments had to be made internationally.
“With international investing we avoid the risk of catastrophic activities locally or regionally arising from man-made [hazards], terrorism events or natural disasters,” he said during the Barbados Investment And Financial Products Showcase And Seminar hosted by Global Event Planners at the Grande Salle of the Tom Adams Financial Centre recently.
“If I’m investing across the Caribbean, am I actually diversifying? I’m diversifying outside of my domestic economy but I’m not actually taking into consideration all of the risk elements.
“So if I invest, let’s say for instance, in Jamaica, we know that Jamaica repeatedly gets hit by hurricanes so I’m not necessarily as well diversified as I would think.
“The idea is that when you’re looking at a diversified portfolio, you need to move outside [the Caribbean],” Hinkson explained.
The former vice-president of investments with Sagicor Life Inc. and manager of investments with the National Insurance Department first cautioned the audience against investing only in local instruments.
He noted that while investments in the domestic market could be structured to eliminate risks arising from the performance of certain firms and industries, this did not reduce the risk resulting from the performance of the domestic economy as a whole.
Hinkson also stressed the importance of diversifying among different types of investments in order to minimize investment risks.
“If I have it all in financial institutions and something happens in the financial institutions, when one goes down, all are going to go down,” he said. (NB)
