Diversification across industry sectors with a single market and across multiple economies should result in higher levels of diversification benefits.

a)The table 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)Fora 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?

30-Apr-2019 Weight 4.22 2.56 S&P 500 FTSE Nikkie 225 30-Apr- 30-Apr- As of 2019 As of 2019 As of Collected - Top Collected - Top Collected - Top Holdings Weight Holdings Weight Holdings HSBC HOLDINGS TOYOTA MOTOR MICROSOFT ORD 4.07 ORD 7.29 | ORD SOFTBANK GROUP APPLE ORD 3.65 BP ORD 6.12 ORD ROYAL DUTCH SHELL AMAZON COM ORD 3.23 CL A ORD 6.02 KEYENCE ORD ROYAL DTCH SHLB FACEBOOK CL A ORD 1.87 ORD 5.04 SONY ORD BERKSHIRE HATHWAY CL B ORD 1.71 DIAGEO ORD 4.28 MITSUB UFJ FG ORD GLAXOSMITHKLINE JPMORGAN CHASE ORD 1.54 ORD 4.26 TAKEDA PHARM ORD JOHNSON & JOHNSON ORD 1.53 ASTRAZENECA ORD 3.96 SMFG ORD BRITISH AMERICAN ALPHABET CL CORD 1.48 TOBACCO ORD 3.74 HONDA MOTOR ORD ALPHABET CL A ORD 1.46 UNILEVER ORD 2.82 KDDI ORD EXXON MOBIL ORD 1.38 RIO TINTO ORD 2.82 NINTENDO ORD 1.79 1.73 1.64 1.44 1.35 1.2 1.15 " Collected - Industry Sector TECHNOLOGY Weight Collected - Industry Sector 26.83 FINANCIALS Weight Collected - Industry Weight Sector 22.11 INDUSTRIALS CONSUMER 19.59 CYCLICALS 26.87 FINANCIALS 18.18 17 HEALTHCARE CONSUMER CYCLICALS 15.89 ENERGY CONSUMER NON- 13.32 CYCLICALS 13.3 HEALTHCARE CONSUMER 10.32 CYCLICALS 14.2 8.96 9.19 FINANCIALS TECHNOLOGY CONSUMER NON- CYCLICALS 8.59 8.57 INDUSTRIALS CONSUMER NON- CYCLICALS 7.03 INDUSTRIALS 8.26 7.95 | HEALTHCARE TELECOMMUNICATI 7.37 ONS SERVICES ENERGY 5.99 5.2 BASIC MATERIALS TELECOMMUNICATI 3.23 ONS SERVICES 2.63 UTILITIES 3.13 BASIC MATERIALS 3.09 UTILITIES 4.98 1.81 UTILITIES BASIC MATERIALS TELECOMMUNICATION S SERVICES Total (Due to rounding) 1.92 TECHNOLOGY 99.67 Total 0.72 ENERGY 98.74 Total 0.97 98.79