How much of your equities in international?

[easysurfer]

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]

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]

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]

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

 

[tuixiu]

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

 

[Gone4Good]

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

 

[Tiger]

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

 

[WM]

We're at about 40%

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

 

[Quantum Sufficit]

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

 

[Midpack]

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]

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]

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!]

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]

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

 

[travelover]

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!]

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]

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]

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]

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

 

[MooreBonds]

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.

 

[easysurfer]

I had thought that I was invested less than most folks in internationals. But it seems like I'm for the most part on par. Thanks for the replies.

 

[travelover]

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.

Correct

 

[LOL!]

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.

The idea that US companies in the S&P500 or TSM index have quite a lot of international exposure works both ways: Many foreign companies in the foreign indexes have quite a lot of US exposure. You do not even have to think hard to come up with RoyalDutchShell, BP, Toyota, etc.

 

[Nords]

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.

Neither am I, but I'm going to assume that if a company is paying dividends (in any currency) then it's producing enough income to stick around for a while.

I don't think that a foreign company can mess with its accounting anywhere near as creatively as an American one. But I also suspect that there is at least one foreign country in the world which will grow faster than the U.S., and I think it's appropriate to put a percentage of my assets there.

Using words like "overblown" and "diworsification" makes it hard to judge the quality of the debate, let alone the appropriate percentage to be allocated, on its own merits.

 

[HornedToad10]

I'm basically 50/50 International/Domestic.

I think Vanguard upped their recommendation recently to 30-50% international instead of the 20%+ international it used to be.