How much of the stock portion of your portfolio is International?

[Focus]

Here's the Vanguard report (March 2012) I mentioned earlier:

https://institutional.vanguard.com/iam/pdf/ICRIECR.pdf

Something that doesn't get talked about much is whether one should factor in the increasing amount of U.S. company revenue that comes from foreign business when deciding on the international fund allocation.

 

[23Red]

Of my total portfolio (not just bonds or equities, etc.), I'm at ~25% in Developed International Equities and Emerging Markets.

 

[Ed_The_Gypsy]

50/50 US/non-US equities (and 100/0 equities/fixed income), as always.

Guided by numbers from The Efficient Frontier, Merriman and Les Antman.

Oil and emerging markets, not suicidal Europe.

 

[Midpack]

I've had 1/3rd of my equity holding in international (and frankly I'd be comfortable with even more), and 1/3rd of that in emerging markets for at least 7 years and I don't expect that to change anytime soon if ever. Furthermore, I wouldn't hold less than 5% of any asset class (your first poll option) - below that the influence is negligible WRT overall returns/volatilty so why bother? YMMV

 

[longinvest]

My portfolio is 75% international: 25% Canada (home)/25%US/25%EAFE/25%EM. (All stock ETFs)

My home market is too small and ill diversified. I feel that having 50% of my portfolio in North America is enough.

 

[okapi]

45% portfolio stocks 50% U.S. 50% International

 

[obgyn65]

I worked in Europe many years, so I have about 1/3 of my NW there.

 

[HFWR]

It's worth remembering that European stocks are not the same as European countries...

VGK holdings:

1 Royal Dutch Shell PLC
2 Nestle SA
3 HSBC Holdings PLC
4 Novartis AG
5 Vodafone Group PLC
6 BP PLC
7 Roche Holding AG
8 GlaxoSmithKline PLC
9 Total SA
10 Unilever PLC

 

[FUEGO]

I am 100% equities, with 50% in international investments as follows: 20% developed markets, 5% emerging markets, 10% international large cap value, 10% international small cap value, 5% international REITs/real estate

 

[EvrClrx311]

Vanguard lists by account at 34% International (non-US) stocks and its financial engine recommends I change that to 27%.

 

[cons]

Per Morningstar instant x-ray:

95/5 mix of Equities/Cash (no bonds)
50/50 mix of US/Intl

31 yo with high risk tolerance and 15+ yrs before I need to withdraw any of these funds.

 

[mickeyd]

I used to be of the school that says the US companies are good enough to capture the stock market. About 10-12 years ago, after much research and thought, I changed to about 20% of my equity position in international stocks. I'm still there.

If that's good enough for Jack Bogle, it's good...

 

[NW-Bound]

A Boglehead (I am not) may not have any international stock, because I thought that he said one did not need to.

So, I searched the Web and got confirmations that the above was true. However, Bogle added that if an investor felt strongly about international stocks, he should have no more than 20%. FWIW...

The poll shows that many posters have more than 20%, same as I do (33% as reported in an earlier post).

 

[RobLJ]

The rationale is a) the U.S. market is no longer the dominant part of the overall market and further is a developed slow-growing economy (growth doesn't mean stock gains, however;
b) relative valuations now support various sectors of International (Europe, developing markets)
c) International stocks pay a comparatively higher dividend than U.S. stocks

International are 16.5% of my total portfolio or 33% of my stock component.

 

[truenorth418]

I have 15% of total portfolio according to Morningstar X-ray. Perhaps I will dial that up based on some of the comments on this thread.

I am surprised that many posters indicate 100% equity exposure. My target is 55% stocks / 30% bonds / 10% REIT / 5% cash.

 

[RobLJ]

I have 15% of total portfolio according to Morningstar X-ray. Perhaps I will dial that up based on some of the comments on this thread.

I am surprised that many posters indicate 100% equity exposure. My target is 55% stocks / 30% bonds / 10% REIT / 5% cash.

You're close to me in target. I'm accumulating still but think stocks are fully valued. I have more cash, less REIT and a scoosh less bonds. I suspect many are misinterpreting the allocation question (is is total % of International stocks in total portfolio or % of stock allocation?)
Or maybe the blog hangs pretty loose in allocations and are hatching a huge nest egg.
Edit: I like international versus U.S. and am considering averaging into more European (i.e., Nordic) and Emerging Market. Averaging in is an important caveat there. Sell Tips and GNMA and use cash over 18 months. But I haven't started yet, so don't listen to me. Also, some will be in Foreign Bonds. I am looking at Fidelity Northern Europe, hard (for averaging).

 

[RobLJ]

I reduced the global investment from 15% to 11.9%, because I am worried about the Spain and Greece taking down the Euro zone further into recession.

This seems to me an opportunity, for Northern Europe. I no longer think Germany will allow the dissolution of the Euro (they reached their TARP moment). I'm quite willing to assume I'm wrong on that; it's not advice.

If Merkel goes down and the opposing party decides to carve out the Euro, that opinion will be disastrous. So be warned in advance. Having listened to the German ambassador in the late 80's, I don't think Germany will turn its back on the Euro project, but it is a significant risk that should be calculated. Germany is not the U.S. on such matters, at least. And I'm not sure whether that is praise or denunciation.

 

[bamsphd]

50/50 US/non-US equities (and 100/0 equities/fixed income), as always.

Guided by numbers from The Efficient Frontier, Merriman and Les Antman.

I'm also 50/50 US/non-US equities.
My current target is 30/30/40 US-equity/non-US-equity/short-term-reserves.

I too was strongly influenced by The Efficient Frontier and Les Antman.

An old Les Antman post comparing a Japanese investor who was invested 100% in Japanese equities versus a Japanese investor who was invested 50/50 Japan/Ex-Japan convinced me that keeping half my equities and all my short-term reserves in the US was plenty of US exposure for me.

 

[FinancialDave]

I personally think that International exposure is overrated, expecially in retirement accounts - this is mostly a retirement website correct?

Don't forget that many large mega stocks such as GE have a very large International exposure already. I have maybe 5% total direct International.

fd

 

[Ed_The_Gypsy]

I thought so once, too, Dave, but the numbers say different. All-in-all, it is just another choice among equities.

 

[FinancialDave]

I thought so once, too, Dave, but the numbers say different. All-in-all, it is just another choice among equities.

I agree it is a way to diversify, but just remember in most cases you "live" in the US and you buy things in the US, so when you diversify outside of the US you are adding another layer of "risk" to your portfolio. This is "currency" risk. Personally I don't need another layer of risk because there are plenty of good companies and funds to invest in within this great country that we live in, why do I "need" to take on all these other risks, especially when I am retired.

Certainly you can find good International companies and US companies and maybe a good academic can make either one look good given the right piece of data.

If you have access to the AAII Journal, the April 2011 volume did a little study using Vanguard funds. It ran from start of 1988 until 2010 and it started with $25,000 in four funds in 1988 -- Let's just look at the two of interest VFINX (SP500) and VTRIX (International). In the static portfolio, where the money was just left to grow, the VFINX grew to $208,326, while the VTRIX grew to $125,873.

Of course I have looked at enough actively managed funds to know that I could find two funds that could prove the opposite case, not really my point. In general I try to keep close to the indexes to analyze what is going on in the market, because I just don't feel confident that on average anyone can beat the market, given the expenses involved.

fd

 

[easysurfer]

I keep 1/3 of my stock portion in International. That percentage just sounds about right for me is why I chose that.

 

[Ed_The_Gypsy]

There is nothing wrong with the way you are looking at it, Dave. I was the same for many years, to my profit. Then I got to tinkering again. Is it better? I think so, but I have been wrong before. We all must do what we are comfortable with.

At one time I wanted 'currency risk' because I thought the USD was not being managed well. Then I found out that most mutual funds are 'hedged' (by which I gather that they have eliminated currency risk). So I wasn't getting what I thought anyway.

Today I do own a few foreign stocks (energy and pipeline stocks, businesses I have learned a little about) as ADRs, traded in the US in USD, dividends paid in USD. My only real currency risk has been working outside the US, being paid first in Canadian dollars (a very good move, by sheer accident) and later GBP (meh). Back to USD today because I was being reamed on the exchange rate by my agency.

For a long time I owned the S&P 500 in VFINX. Then I discovered 'slice-and-dice', which further broke the market down into more asset classes which led me to lose interest in large growth (completely cynical about large growth) and lean towards small cap and value and now dividend payers and dividend growth.

By the way, I don't like VTRIX either. Vanguard has played games with their international funds over the years.

I do have a few stocks and a small amount in two managed funds, but mostly index funds, just not total market index funds. Maybe I am only a little stupid?

 

[freebird5825]

7% international

AA 32/64/6

 

[photoguy]

I agree it is a way to diversify, but just remember in most cases you "live" in the US and you buy things in the US, so when you diversify outside of the US you are adding another layer of "risk" to your portfolio.

By investing internationally you are avoiding the risk of the US doing poorly for an extended period of time.

If you believe in efficient markets and index funds, there's no reason not to diversify into international equities.