dasinsin said:
There is another reason I have the idea to separate Asia equity and Europe equity instead of just to have an international ETF is correlation. When the invest portfolio is un-correlated, then it is better. It should be same in Europe and Asia Equity, right? :
This is the Total Markets vs Slice-and-Dice debate. I guess I, like WilliamG, slice and dice on geographical boundaries, too. But my slices are pretty close to the market weights, except for my country of residence which is overweighted.
My impression of slice-and-dice is that it doesn't make a huge difference relative to total market, so it depends on how much effort you want to put into it. (I'm getting lazier over time.)
The most important thing is costs. For this reason, I would go with mostly Vanguard ETFs. This will naturally give you some geographical breakdown anyway. I might define 5 geographical regions:
Developed Europe (VGK)
Developed Asia/Pacific (VPL)
North America (VTI, plus maybe a little EWC if you want to be complete)
Emerging Markets (VWO)
Taiwan (TTT)
Of course, if you were to go for strict total-markets weighting, you wouldn't need the TTT, since it is included in VWO. Otherwise, some weightings I might consider are:
1/N (20% in each category above)
50% Taiwan, 12.5% North Am., 12.5% Europe, 12.5% Asia/Pac., 12.5% EM
50% Taiwan, 20% North Am., 15% Europe, 10% Asia/Pac., 5% EM
30% Taiwan, 30% North Am., 20% Europe, 10% Asia/Pac., 10% EM
Etc., etc.
What do you feel comfortable with over the long term?
That might be the second most important consideration, after cost.