Trump’s remittance tax is spooking many around the world. Some Indian residents investing in US assets are also worried if their withdrawals may also fall in this tax net.
A while back, I wrote that diversification doesn’t strictly reduce portfolio risk. This remittance tax is an acute example of how holding assets in the US exposes us to more risk.
Just to be clear, this post is not about global diversification or US assets. The only point I am trying to convey in this post is that diversification does not strictly reduce risk; it alters the portfolio’s risk-reward behaviour.
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