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The growth of economy integration has fuelled the interest of investing in emerging stock markets over the world. The extremely high growth rates and the low cross-markets correlations have attracted investors to these markets. Seeking a higher level of returns, with the same or smaller risk value than the developed stock markets was the motivation of those investors. This study attempted to investigate the potential gains from constructing international portfolio consisting of securities from developed and emerging stock markets. This study has been conducted on 24 emerging stock markets over the period of 1995 2010 and it has adopted the UK investor s perspective. The findings support completely the study s hypothesis and point out the enormous benefits that the UK investors would have captured from diversifying on those stock markets over the period considered. The results emphasised the high performance of the international portfolio during the period 2001 2004 compared to the UK-only portfolio (0.112 and 0.049 respectively).
