There is now a strong trend toward international diversification in all countries, however, especially among U.S. institutional investors, such a corporate and public pension funds. In the early 1970s, U.S. pension funds basically held no foreign assets; the percentage of foreign assets approached 20 percent of the total assets by 2006. Indeed, the mere size of foreign markets justifies international diversification even for U.S. investors.

What's the argument in favor of international diversification? What are the advantages of international investing? Don't limit your analysis to equity investments but consider bond investments too.

There are also several impediments to international portfolio diversification. What are the arguments against international diversification?