Asset Allocation--Int'l Exposure via US Firms

[RetireeRobert]

Just ran across some interesting stats about US companies I didn't realize.
This info would affect asset allocation when one either does or does not want international equity exposure.

The data was a list of US firms and how much of their revenues were derived from non-US sources.

Such as: Intel--79%
Coca-Cola-72%
ExxonMobile--69%
Schlumberger-67%
McDonalds----65%
HP----------65%
3M----------61%
United Tech---60%
du Pont------60%
Altria Group--58%
Procter Gamb-57%

and the list goes on.

Meaning, folks thinking they have solely US equity exposure, may actually have a lot more Int'l equity exposure than they ever dreamed. Some folks may want to achieve Int'l exposure this way and put these companies in their portfolios. Others may want to avoid them. This info was from a Morningstar publication, but I don't have any web link to the full list.

Maybe someone else knows where such data can be found on the internet.

 

[ats5g]

RR,

From Eric Haas's site, one paper that I'm aware of is:

Stephen E. Christophe and Richard W. McEnally, "U.S. Multinationals as Vehicles for International Diversification," Journal of Investing, Winter 2000, pp. 67-75.

The authors consider whether investors can obtain the benefits of global diversification by purchasing the equity of U.S. multinational corporations. They find that USMNC returns tend to move with the swings of the U.S. market, irrespective of the location of their foreign operations, so they provide little in the way of global diversification.

My local library has electronic access to most of these journals, so yours probably does as well.

- Alec

 

[RetireeRobert]

RR,

From Eric Haas's site, one paper that I'm aware of is:

Stephen E. Christophe and Richard W. McEnally, "U.S. Multinationals as Vehicles for International Diversification," Journal of Investing, Winter 2000, pp. 67-75.



My local library has electronic access to most of these journals, so yours probably does as well.

- Alec

Thanks for the reference, and the note on those authors conclusions about such companies stocks moving in tandem with US rather than foreign markets.

 

[jIMOh]

International and Global funds are often as much a hedge on the US dollar as they are an investment in a foreign company.

Are their any international funds out there losing money now? Most I see are up 20% or more- can you say "bubble"? Once the dollar gets stronger (I assume that will happen right after GWB leaves office) I think we'll see a turn on which asset classes lead.

My take on this is I make international funds only 25% of my portfolio... because companies like above in S&P 500 are also global companies, my large cap domestic slice also has some foreign exposure. Add into that I work for a German company, I know all our US sales get converted to Euros for the "bottom" line. it makes sense to me not to have too many eggs in the same basket.

 

[audreyh1]

That's one reason I feel that I have plenty of "foreign" exposure, because most of my large cap exposure would have high international sales. Large cap companies tend to be multinationals.

I do have foreign funds, but perhaps not in the high percentage some folks do. And of course, many of my regular stock funds seem to have some ownership of foreign companies anyway.

An interesting opinion I read a while ago asserted that the falling dollar in fact favored these US based multinationals over foreign based companies since the falling dollar makes US based multinationals more competitive. So domestic large cap funds might see some appreciation at the expense of international funds.

Audrey

 

[jIMOh]

That's one reason I feel that I have plenty of "foreign" exposure, because most of my large cap exposure would have high international sales. Large cap companies tend to be multinationals.

I do have foreign funds, but perhaps not in the high percentage some folks do. And of course, many of my regular stock funds seem to have some ownership of foreign companies anyway.

An interesting opinion I read a while ago asserted that the falling dollar in fact favored these US based multinationals over foreign based companies since the falling dollar makes US based multinationals more competitive. So domestic large cap funds might see some appreciation at the expense of international funds.

Audrey

Yes- I have read that the falling dollar also jacked up gas prices (dollar is not worth as much to foreign oil companies). So foreign companies doing business in the US need to jack up prices to compete.