AbstractThe purpose of this article is to analyze the effects of international portfolio diversification on an investment portfolio. In doing so, alternative investment vehicles will also be examined. Finally, derivative securities will be discussed, as well as how they can further improve a portfolio's performance. Investment Improvement Document There are several factors to consider when trying to evaluate how to invest your money. A good starting point, however, is to evaluate not only which funds to choose, but also the composition of the portfolio. Three distinct elements will be evaluated here. First, the effects of international diversification on an investment portfolio will be analyzed. Next, alternative investment vehicles will be reviewed and discussed. Finally, we will explain how the use of derivative securities can further improve a portfolio's performance. Several people have looked at choices outside of investing in the United States. International portfolios are no longer rare. International portfolios can create even greater diversification for the client. Indeed, if the US stock market collapses, the majority of your portfolio will be virtually lost. Even if there is a decline, overall the impacts could be huge. However, if one were to take, say, 40% of one's funds and allocate them to international stock markets, not all of your investments would depend on the performance of a specific stock market or economy. Thus, a much broader form of diversification is created. After assessing whether an international portfolio is something they would like to invest in, the next step is to invest in alternative investment vehicles. There are several different types of investments. Stocks, Bonds, Money Markets, Mutual Funds, CDs, etc. There are also other types of investments that can be made, such as real estate, collectibles, etc. Derivative securities are another alternative investment vehicle that can promote or improve the performance of a portfolio. A derivative security is “a security whose returns depend on the current price of an underlying asset and which allows investors to offset the position of their positions in the spot market.” www.commerceinvest.com/Education/terms/TermPages/D.htmThe market for derivative securities has become very important in recent years. Worldwide, these securities provide “insurance” on financial securities estimated at $16 trillion. A good comparison is that the derivatives market is similar to the insurance industry in that "their economic function is to transfer risk from those who are unwilling to bear it to those who are willing to bear it for a fee." »..