Geographical allocation

Geographical allocation is the distribution of the assets constituting the portfolio of an UCI by major geographical areas.  
A distinction is made by continent or by country for a global investment universe and by country for an investment universe limited to a single continent.  

The principle underlying this form of diversification is as follows: on average, a geographically diversified portfolio will incur lower risk and generate more consistent returns than an investment in the stocks of a single continent or a single country.  

In terms of geographical diversification, the impacts in terms of currency exchange constitute one of the levers of potential performance.  

Geographical allocation corresponds to the geographical prioritization choices made by the OPC manager for a particular geographical area (for example, overrepresentation of emerging countries in a global fund, underrepresentation of Southern European countries in a European fund compared to their weight in the benchmark indices. See "Diversified Management").