• 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5

International investing

This seems like a good time to be in international stocks/funds.  Is there any general agreement as to what percentage to allocate to international in one's portfolio?
I think having funds in international has made sense over the last year, but international is already 2x over the S&P YTD return. Is it too late, not sure. Is it time to make a big move? I would be careful.
The ex-US return has indeed been higher than the US counterpart in recent times. At the same time, the ex-US return has been lower than the US counterparts in 1+, 3, 5, and 10 years. So I'd think that the ex-US is still a good place to be. If we take the global recession (2007-2009) bottoms as the "reset" points, then it'd appear that ex-US has a lot of recovery headroom to get back at par.
The 2 broad index fund returns (VTI - US Total Stock and VEU - ex-US):
In Global equity market, US:Non-US ratio is approx. 55:45. So if someone wants to be uniformly invested, 50:50 is a good split.
I think I saw a report somewhere that the performance of 50:50 and 70:30 are very close (in terms of cumulative return and average volatility). IMHO, 70:30 works better than 50:50 for investors who want to go all out.
Most people have more confidence with US stocks, compared to the ex-US counterparts, especially in emerging/frontier markets. This is a natural feeling since we have most visibility into US, and also have some say in US (through democracy, opinion-poll, etc.). So some go as low as 90:10, or overweight developed countries and go a little higher exposure. I doubt if less than 10% exposure makes any meaningful difference. My personal target is 80:20, but I'm at 85:15 right now.
I think that 10-15% seems about right, based on what I'm reading.
(11-28-2018, 12:42 AM)cm1988 Wrote: I think that 10-15% seems about right, based on what I'm reading.

From all the recent investing books I read it appears the magic % mix of international (MSCI EFAE) stock is about 16% of your total stock allocation. With this number your overall portfolio risks comes down and probability of higher total return over longer term gets increased (very counter intuitive at times - but with a nice graph it shows how data from 1970 to 2013 stacks up Ref: page 203 of 'A Random Walk Down Wall Street').
I am invested 5% emerging market, and 15% developed.... in a up or down market
Personally, I am 15% international stocks in my equity portfolio.  That represent 6% of my entire securities portfolio as I have the greater part of my investments in bonds (43%).
I have been told that 15% is not enough and I should shoot for 30% (or more) of my equities in international stocks with the rationale that the US represent  only a portion of the equity universe.  I followed that advice some time ago when International was in a decline.  My conclusion -It all depends on several external factors beyond your control and one internal factor, i.e. your comfort level.
All of my International exposure is via Funds - no individual company.  I am good with that fund approach.
The contrarian in me begins to get concerned when I read not only here, but on the other financial forums that I read that international is now the place to be. It was the place to be last summer after the Brexit vote. I think people see those 15% - 20% returns and think, wow I want that. Is there still life left in international, maybe, but I fear the herd is chasing returns instead of being ahead of it.
I have 10% (of total invested assets) non-US exposure but its all emerging markets equities.

Forum Jump:

Users browsing this thread: 1 Guest(s)