Diversification across industry sectors with a single market and across multiple

economies should result in higher levels of diversification benefits.

a) The table (on the next page) provides the top ten holding and industry weighting for the

indexes from three markets - US, UK and Japan. Using the information from this table, explain

if investing in a capitalisation-weighted market index fund results in a well-diversified

portfolio for that market?

b) For a portfolio that allocates a third across each market by investing in the market index fund,

explain if this portfolio is now be better diversified, than each single market portfolios?