How wise would it be diversify through having ETFs from many different countries?

It is wise to diversify but it is not wise to merely diversify into different countries etf. In a crisis, investors tend to sell everything at the same time. Hence the prices of all the etf would inevitably fall. In my personal opinion, a well-diversified portfolio should contain a mix of assets with low correlations. That way, when one asset falls, the other assets will move higher to offset any potential losses.

There are two main forms of risk, systematic and unsystematic risk. To effectively reduce risk, you need to know which are you targeting.

(i) systematic risk

• this refers to events that can affect the market as a whole (e.g. changes in interest rate, natural disaster)

To reduce this risk, you could have different investments that behave differently to changes in interest rate for example (Financial companies and REITs). The rise in price of one may offset the decrease of the other, leading to minimal decrease. This would also limit your potential gain.

(ii) unsystematic risk

• refers to risk associated with the particular industry/firm (e.g. changes in regulation of 1 industry, entry of a competitor)

Buying into multiple companies can reduce the risk of a particular firm. Buying across multiple sectors can reduce the risk of the particular industry. ​​​