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-   -   How much of your equities in international? (http://www.early-retirement.org/forums/f28/how-much-of-your-equities-in-international-54417.html)

easysurfer 01-26-2011 12:25 PM

How much of your equities in international?
 
How much of one's equity portion should be invested internationally?

I currently have 1/3 of my equity portion invested internationally.

What's the rule of thumb (if there is one)?

Or is it back to the old approach...only have enough that you can sleep well with?

HatePayingTaxes 01-26-2011 12:37 PM

It really depends on the individual. It's somewhat uncorrelated with US equities so I have about 30% of my equities in international. I can sleep at night with this but it's mainly because I'm comfortable with my equity/bond split. Equity/bond is really what makes the difference.

Nords 01-26-2011 12:50 PM

Quote:

Originally Posted by easysurfer (Post 1029171)
I currently have 1/3 of my equity portion invested internationally.
What's the rule of thumb (if there is one)?
Or is it back to the old approach...only have enough that you can sleep well with?

Up to you.

One factor to consider is how much of your domestic portfolio gains its revenues/profits from international sales. Coca-Cola is an example of a multinational company that has more growth overseas than domestically.

Rich_by_the_Bay 01-26-2011 01:01 PM

20% Vgd international index. The domestic equity index companies have global holdings so it is higher than that in reality.

tuixiu 01-26-2011 01:04 PM

1/3 of equities in Vgd international index (25% across all portfolio)

Gone4Good 01-26-2011 01:05 PM

If your goal is to hold the "market portfolio" a less than 45% allocation to U.S. equities is the right number.

Tiger 01-26-2011 02:19 PM

33% in VTIAX. 39% including foreign holdings in other stock funds.

WM 01-26-2011 03:02 PM

We're at about 40%

edit - that's not counting foreign holdings in other funds

Quantum Sufficit 01-26-2011 03:42 PM

Hello, new here. I am 70% domestic, 30% international

Midpack 01-26-2011 04:31 PM

Four Pillars [my investing bible] recommends 1/3rd, so that's my target. I'm currently at 29% of overall equities (and of that 2/3rds Van TM Intl and 1/3 Van Emer Mkts FWIW).

Marc1962 01-26-2011 04:44 PM

Quote:

Originally Posted by Rich_in_Tampa (Post 1029184)
20% Vgd international index. The domestic equity index companies have global holdings so it is higher than that in reality.

I see this a lot on bogleheads.org and in various investment books, but I have yet to see anyone take into account the domestic holdings of international companies. My operating assumption is that the two factors cancel one another out.

In my personal allocation, I tilt toward the U.S. because I live here - 60% U.S. / 40% International.

FIRE'd@51 01-26-2011 04:50 PM

Quote:

Originally Posted by Nords (Post 1029177)
One factor to consider is how much of your domestic portfolio gains its revenues/profits from international sales. Coca-Cola is an example of a multinational company that has more growth overseas than domestically.

Exactly.

Something like 30% of the revenues of the S&P 500 come from abroad, so one has a lot of exposure to international just by holding an S&P 500 index fund. To a large extent, the question becomes one of whether you want exposure to foreign currencies, since many US companies hedge part or all of their currency risk.

LOL! 01-26-2011 05:00 PM

Foreign equities are a little over 50% of our stocks which means we still are underweighted with respect to non-US stocks.

Morningstar instant X-ray shows that ACWI (a world stock index exchange-traded fund that follows the MSCI all-world index) is about 57% foreign and 42% US.

freebird5825 01-26-2011 05:04 PM

7% international of my current 32% allocation to stocks is my comfort zone. VEUSX is the parking spot. ;D

travelover 01-26-2011 06:59 PM

My equities are split 1/3 large cap, 1/3 small to mid cap and 1/3 international. I use the Fido Spartan international fund.

LOL! 01-26-2011 07:25 PM

Quote:

Originally Posted by travelover (Post 1029319)
My equities are split 1/3 large cap, 1/3 small to mid cap and 1/3 international. I use the Fido Spartan international fund.

Since "equities" includes US and foreign equities, I don't understand this statement.

I infer you meant "1/3 US large cap, 1/3 US small/mid cap, and 1/3 foreign developed large cap". You have no foreign small cap and no emerging markets of any cap.

veremchuka 01-26-2011 09:47 PM

i have no idea how one could figure out their international exposure held in domestic equity funds via s&p 500 or total stock market index. i have about 12% in international. i'm surprised at the high % of international holdings but it totally depends upon your risk tolerance and asset allocation.

bcinvest 01-26-2011 10:05 PM

Quote:

Originally Posted by Marc1962 (Post 1029260)
I see this a lot on bogleheads.org and in various investment books, but I have yet to see anyone take into account the domestic holdings of international companies. My operating assumption is that the two factors cancel one another out.

In my personal allocation, I tilt toward the U.S. because I live here - 60% U.S. / 40% International.

I am not familiar enough with international accounting standards or international politic to venture into foreign investing. I have enough trouble keeping up with US equities. I am strong believer in sticking with what I know and limit myself to the US. With that said several of the companies I have have strong foreign operations. The whole international/US equities issue is way overblown as is asset allocation and diworsification.

kumquat 01-26-2011 10:06 PM

I'm about 65% domestic, 30% international and the rest is in the US markets.

MooreBonds 01-26-2011 10:06 PM

Quote:

Originally Posted by veremchuka (Post 1029374)
i have no idea how one could figure out their international exposure held in domestic equity funds via s&p 500 or total stock market index. i have about 12% in international. i'm surprised at the high % of international holdings but it totally depends upon your risk tolerance and asset allocation.

Just as a company like Cisco or GE can only grow so much after already growing huge amounts, so too can the US economy (and larger companies) only grow so much after a century of going from a developing nation to the world's superpower. For an example, consider how England went from being the world's superpower in 1890 to it's status in 1990, and how their stock markets followed a partially correlated path.

As a result, while the US economy will grow, comparitively speaking, the emerging markets will grow substantially more than the US. Since equity valuations have a good correlation to profit growth (among other factors), it would lend itself to expect emerging markets to have many companies growing substantially more than the US.

Furthermore, there is also a supply/demand component - as local investors in devleoping nations benefit from increased jobs and income, they will accumulate excess cash to invest. A good chunk of this will find its way into the stock markets of their local country...so you have a double positive effect.


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