International Investing....why?

[Stormy Kromer]

OK, I've been investing over 35 years both with an advisor and on my own I've been told to keep a percentage of my equities in International funds, around 25%. I have.

Looking back these funds haven't kept even close to US funds, let alone the SP 500. 10 year average is 5.05% for Vanguard International, others I hold are worse.

These International funds have been a boat anchor in my overall portfolio. Hindsight is clear, I should have stayed all US.

How long of a time frame do you give a sector to catch up ?

I no longer believe in diversification for the sake of being diversified. Heck, its darn hard to beat a portfolio that is 100% SP index over any period of time. 1 year, 10 years or 30 years. I don't see the need for International funds, other than the fact you can buy them cheap. You can buy them cheap because the don't increase in value much over time. You can buy them cheap next year too if you want.

Am I missing something? I tell everyone younger than me to pass on International or anything fancy, just buy the SP 500 index and go back to work.


Rant over.

 

[madatrub]

In my 401k, International is 18.84% Return in the last 1yr.
S&P Index is 19.54% in the same timeframe.

 

[38Chevy454]

I agree that international has lagged for many years. I got out of international probably 10 years ago if not longer. No regrets. Because I hold S&P and market index funds, by nature it has passive international exposure due to global companies. That is sufficient international exposure for me and my diversification.

 

[COcheesehead]

I hated international. It always was a laggard. I was down to 4% international allocation because it was so bad.
Then within the last year or so I started reinvesting in the category when I saw fund flows increasing in the category, my holdings are up 31% in one year, 16% YTD. Not the best, but second only to my micro cap investments which are up 1 year 36%, 23% YTD.

 

[RetiredAt49]

Agree with OP. 100% of my portfolio is in US based stocks and mostly in low cost index funds/ETF’s (VOO, VTI, QQQ).

 

[2017ish]

I think back a few years. If I am a Japanese investor in 1989, why in the world would I invest outside of my own country's market? OTOH, if I am a Japanese investor in 2023....

 

[DrRoy]

I've had little Int'l for 20+ years against advice, and to my benefit.

 

[street]

I have always had about 7% international/global stock through the 40 years of investing. I like a mix and I don't believe it ever hurt me that much not to have some invested global.

 

[Gumby]

I had international funds for over 20 years, but I gave up about 3 years ago because they proved to be just a boat anchor on performance rather than a diversification benefit. When the US market has tanked, so has everywhere else, but generally worse.

 

[Cortina]

Simple fact and data from my own holdings : (whoppee - a sample size of ONE !!)
Since I started investing - return on USA stocks as of last week +84% , UK stocks , +11%. A year or so agao it was "different" USA was +95% , UK was +5%. By UK I mean FTSE listed shares. I understand that UK does not equal International Investing , but my numbers may help paint a picture. This is over approx 20 years , lucky for me - 75% of total investment has been in USA stocks

 

[Dtail]

I agree that international has lagged for many years. I got out of international probably 10 years ago if not longer. No regrets. Because I hold S&P and market index funds, by nature it has passive international exposure due to global companies. That is sufficient international exposure for me and my diversification.

Same here except got out 5 tears ago.

 

[street]

I had international funds for over 20 years, but I gave up about 3 years ago because they proved to be just a boat anchor on performance rather than a diversification benefit. When the US market has tanked, so has everywhere else, but generally worse.

I'm sure you are right Gumby, but I have seen through the years of volatility the international did smooth out those rough years US down Global better. As far as being leader year in and year out I don't believe it would be my first choice.

I have seen being diversified, help me more than hurt me and stopped some of the bleeding Peter to pay Paul thing.

 

[imbatman]

I'm holding on with good sized non-US diversification, but I agree it has been a hit to my holdings. Hard to time the market or make it logical, but valuations are better outside the US and there is more growth to be had outside the US.

 

[eytonxav]

I abandoned international years ago, it never seemed to perform nearly as well, and at least in my port had more volatility vs US.

 

[FREE866]

I've had exposure to emerging markets for last 10-15 years. Thankfully not a big % , but it's def been a drag on the portfolio.

 

[mrfeh]

Am I missing something? I tell everyone younger than me to pass on International or anything fancy, just buy the SP 500 index and go back to work.

Recency bias.

Yes, US has done better than ex-US over the last 10 years, but that is water under the bridge. The question is - what will happen in the future?

Lots of posts over on bogleheads.org if you want to hear other opinions.

 

[Badger]

I never had a direct investment in international but I have a small amount as a percentage in a couple of tIRA mutual funds. If it weren't for those I probably wouldn't have any.

Cheers!

 

[LateToFIRE]

I've been getting this same advice for the past 30 years, have always regretted any allocation to international, have learned to keep it relatively small.

 

[Echard]

One thing I like about international stocks is that the dividend yields are higher right now.

 

[Sanstar]

Years ago I worked for a CFO of our very large healthcare system. We were chatting one day and the topic of retirement investing came up. He told me something that has stuck with me ever since:”Never bet against the US.” Warren Buffett’s autobiography advises avoiding bonds unless you really want to be in the money lending business.

All my equities are US ETF funds. Portfolio is 90% US equity and 10% cash. Rebalance every few months and am very happy with results.

 

[jazz4cash]

I subscribe to the notion that a significant portion of SP500 revenue is derived from international sales making a dedicated allocation somewhat redundant. We do have ~5% in the TSP I fund. International gets too complicated with emerging vs developed and a myriad of sectors and sub sub sectors.

 

[enjoyinglife102]

I'm one more who has been out of international stocks for over 20 years agreeing with others that US companies have plenty of exposure to international business. Bogle and Buffet say they're not needed, that's good enough for me.

 

[Phroig]

My international allocation is usually 20-33% of equities. Currently at the higher end of that range, mainly due to trimming U.S. equities.

 

[Al18]

You diversify because the entire market doesn’t all move in the same direction. Last year, ex-US equity performed 4% better than US equity, according to the Callan Table of investment returns https://www.callan.com/research/2022-classic-periodic-table/

(Link fixed)

 

[MarieIG]

Yes, I do have some X-US for diversification. It is one of those funds I "forget" I have, IOW, I just let it sit there. It dragged for years, and is a bit up this year.