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Rebalancing the portfolio -- International
Old 03-19-2008, 04:20 AM   #1
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Rebalancing the portfolio -- International

I am note going to move any money from equity to bonds when I rebalance this year. The equity market did that for me.

But we are a bit heavy on Domestic Large Cap stock.

I want to get a little more international exposure.

Is now a good time to rebalance some of our assets to International?

What about moving a little more to domestic small cap equity?


Thoughts please.
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Old 03-19-2008, 07:44 AM   #2
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Quote:
Originally Posted by chinaco View Post
I am note going to move any money from equity to bonds when I rebalance this year. The equity market did that for me.

But we are a bit heavy on Domestic Large Cap stock.

I want to get a little more international exposure.

Is now a good time to rebalance some of our assets to International?

What about moving a little more to domestic small cap equity?
What is your current allocation in these stock asset classes? I like holding both of these, but without knowing your current allocation in them (if any) I don't know if I'd move.

For what it's worth, about 70% of my portfolio is in stocks, and of that, about 1/4 are in international and small caps (about 16-18% of the total portfolio allocation).
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Old 03-19-2008, 08:44 AM   #3
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I use Vanguard Portfolio watch . It does all the work for me .
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Old 03-19-2008, 09:37 AM   #4
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When was the last time you rebalanced?

International had a huge run up the lst 3-5 years.
Large cap domestic was lagging behind

so if large cap is higher now. I might offer that allocation has been out of whack with market trends and you need to look at whole financial plan, not just two funds.
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Old 03-19-2008, 10:15 AM   #5
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I use Vanguard Portfolio watch . It does all the work for me .
I have the Vg port watch, but it doesn't do any work for me. Can you please explain about all the work it does for you? I just don't understand. Thanks!
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Old 03-19-2008, 11:27 AM   #6
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Is now a good time to rebalance some of our assets to International?

What about moving a little more to domestic small cap equity?
The time to rebalance is when your IPS tells you to. If you don't have an IPS, I strongly advise you write one. It will keep you from asking questions such as these and acting at the wrong time.

Your holdings in international vs. US, small vs. large should be dictated by your asset allocation plan (see IPS statement above), not by your amateur assessment of market conditions.

Those who fail to plan, plan to fail.

Studies show that adding up to 40% international will reduce volatility and improve returns. The appropriate band seems to be between 20%-40%. I'll have to find the study, but in essence:

-Adding more INT to a 20% INT portfolio has a 90% chance of lowering volatility and improving return
I believe this falls to 8X% after you approach 30%. Diminishing returns and all.
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