What % do you hold in international, and why?

[Delawaredave5]

60% stocks with 50% of the stocks international (30% of overall portfolio). And US stocks are tilted towards large cap global companies. Also started buying global REIT (FIREX from Fidelity and looking at others).

I think these numbers are close - the US is:
5% of world's population, which has
15% of the world's consumption, which uses
20% of the world's energy, and the US market capitalization is
50% of global market capitalization

I do not see how this "extreme concentration of energy, consumption, and capitalization" can continue.

I just gotta believe that over the next 20 years the return on capital and equities internationally has to be higher than US.

And if the international returns are not greater, they'll be equal or close -- and hopefully "smooth out" returns overall.

 

[martyb]

Currently 20.5% international in my 401(K)/TSP. I was MUCH higher % recently, but have now adjusted to my current allocation.

 

[unclemick]

And yes the Pats have a good football team.

Unfortunately tonight the Giants had a better one. So that means now that my hormones are all stirred up - maybe take another look at PID and things like that since I'm an old Mergent's Handbook buyer from when they only covered US dividend payers.

heh heh heh -

 

[Spanky]

24% international (18% VEU, 6% VWO).

 

[bpp3]

Think of what happened if you were Japanese and REed in 1990 with all of your assets in the Japanese market. Now think about how much better of you would be if you had half in non-Japanese equities. I think that case study alone is a sufficiently strong argument for international exposure.

I'm at about half domestic (Japan) and half foreign, for both stocks and bonds, for just that reason. I don't care whether domestic or foreign stocks/bonds/currencies do better -- I figure I should come out about the same either way.

Now watch the real action turn out to be in Barbie Dolls or something.

 

[Medit8]

About 85% "international" (i.e. non-US) and 15% US. Of that, about 75-25% equity vs fixed income/cash or cash equivalents.

Although proper "decoupling" of other economies from the US is largely a myth at this stage in my view, recovery and growth prospects in emerging markets seem more interesting, again in my view. The ride you get going down and back up is more severe, but the rewards seem to be infinitely more encouraging. It has taken some getting used to, but when a recovery does come about, the rewards tend to be remarkable.

 

[Bestwifeever]

Fidelity Diversified International (FDIVX), 10 percent, plus whatever international might be part of other funds (large cap, small cap, etc.). Down 7.6 % since 1/1/2008, but still up 8.9 % since 2/2/07.

Why? Wanted to have a little riskier element in AA that wouldn't kill us if it went way down. Might get out of it when we retire.

 

[ats5g]

Roughly 40-50% of equity allocation is in non-US stocks.

Why? See:

The Long-Term Risks of Global Stock Markets

Global Stock Markets in the Twentieth Century

- Alec

 

[jIMOh]

Please indicate whether the % is of your whole portfolio (i.e. cash, bond, stock) or is just of the stock portion.

We currently have ~15% international (of total portfolio). This includes total international and emerging markets funds.

We are thinking of increasing our exposure but would like to see other's reasons for either holding less or more.

Still actively contributing with retirement hopefully 5-10 years away(overall asset allocation 73% stock, 18% bond, 9% cash).

Thanks!!

25% foreign

Always allocate at least 15% of each account (401k, Roth, rollover) to foreign large cap.

10% can go to International small caps (Rollover and Roth), emerging markets (my 401k) or to foreign large caps (wife's 401k).

I choose not to invest in country sector funds. I prefer more diversified international holdings.

Anything more than 25%, IMO, is too much currency risk.

It should be noted that what is a large cap in many countries (maybe 500M or 1000M market cap) would be small cap or microcap in US. So not all large caps are created equal.

 

[Achiever51]

My AA is 60/40 stocks/bonds, although right now I'm a little bit higher in bonds.

Current diversification is:
43.5% Bonds
30% Large US stocks
11.1% Mid/Small Stocks
15.4% International stocks (Including emerging markets)

Over the weekend, a local tv station had an hour feature program on the growing auto industry in China and India and how quickly they are gaining on the US/Asian/European mfgs. The big issue is still quality, but they are making significant improvements there and the expectation is that they will soon be a real threat, not only in that part of the world --an emormous market --but in the US as well. Also, I notice that recently two huge Indian-based firms acquired major interests in two local auto suppliers here in southeast Michigan. Maybe I'll take another look at the international/emerging markets when I do my portfolio rebalancing..............

 

[Lusitan]

80/20 asset allocation between equities/bonds.

Of the equities, roughly 50% in international. Mostly based on my belief that the relative importance of the US economy will decline over my long-term investing horizon (I'm 33).

 

[FinanceDude]

15% for now, I was at 20% from 1999-2006........

I suppose I will always have 15% or so in international, I think our markets have a harder time moving upwards than smaller more "agile" economies........

 

[WilliamG]

Vanguard used to recommend 20% of equity. Got their quarterly report in mail yesterday and it had their latest "position". Basically 20% is the floor and can be up to 50%. They recommend 20-40% to adequately get diversification benefits at lowest level and perhaps greater growth in the long run at higher levels; i.e., prospects for rest of the world having greater economic growth over US next few decades.

1) Since we are retired and somewhat conservative, and
2) since a high percentage of our US stock has a global footprint and can benefit from the global economy:

we're staying at allocation we've had for a long time, 20% stock allocation( 10% total portfolio).

 

[ats5g]

I think that it's important to point out that higher economic growth doesn't necessarily translate into higher returns to shareholders. The whole growth/value effect.

- Alec

 

[Moemg]

I'm at 10% and that's the amount I'm comfotable with .

 

[megacorp-firee]

I think that it's important to point out that higher economic growth doesn't necessarily translate into higher returns to shareholders. The whole growth/value effect.

- Alec

True, but lower economic growth usually does translate into lower returns to shareholders.

 

[ats5g]

True, but lower economic growth usually does translate into lower returns to shareholders.

I'll have to check back after I re-read J. Siegel's 2005 book, but IIRC, China, for example, had higher economics growth than Brazil, but the returns to shareholders of the stocks of the Chinese companies was about zero real, while the returns to shareholders of the stocks of the Brazilian companies was much higher.

Siegel also shows this with industries and individual stocks [i.e IBM vs Standard Oil].

- Alec

 

[SecondCor521]

0% for reasons that have already been mentioned or alluded to previously, plus simplicity.

2Cor521

 

[Lsbcal]

Have 34% of equities in internationals because I read a study that said this pretty much captured the asset class return. Have been rebalancing into US since internationals have outperformed for last few years. Hold HAINX and DODFX about 50/50 so this is large value portfolio. My bogie is Vanguard Total International which has done OK but not as good as the active funds so far.

 

[ats5g]

I'll have to check back after I re-read J. Siegel's 2005 book, but IIRC, China, for example, had higher economics growth than Brazil, but the returns to shareholders of the stocks of the Chinese companies was about zero real, while the returns to shareholders of the stocks of the Brazilian companies was much higher.

Siegel also shows this with industries and individual stocks [i.e IBM vs Standard Oil].

- Alec

Found it.Pages 226-230 of The Future For Investors, Jeremy Siegel [2005]

1992-2003 Real GDP Growth [total return]
China 86%
Brazil -6%

1992-2003 stock returns
China -10% per year
Brazil over 15% per year

The conventional wisdom that investors should buy stocks in the fastest growing countries is wrong for the same reason that buying the fastest growing firms is wrong. China was indisputably the world’s fastest growing country, but investors in China realized horrible returns because of the overvaluation of Chinese shares.

The failure of economic growth to produce good stock returns extends far beyond the case of Brazil and China. Countries with reasonably priced markets, such as Brazil, Mexico, and Argentina gave investors the highest returns, although their economic growth as among the slowest. Even if we exclude China (the fastest grower and worst performer) and Brazil (the second slowest grower and third best returns), the relation between GDP growth and return in those countries is still negative.

The same conclusion holds for developed economies. When Dimson, Marsh, and Staunton, in their landmark study Triumph of the Optimists, analyzed the data from sixteen countries from 1900 forward, they also found a negative relation between GDP growth and real stock returns. Japan had the highest growth of real GDP but poor stock returns. South Africa had the lowest GDP growth but the third highest stock returns, surpassing returns in the faster growing United States. Australia and the United Kingdom had among the weaker real GDP growth rates buy relatively high stock returns. Growth is not enough to sustain a profitable investment strategy.

Again, the whole growth vs value effect. The slower the economic growth and expectations of a firm/country were, the lower priced its shares were, and the higher the investor returns were.

- Alec

 

[megacorp-firee]

Found it.Pages 226-230 of The Future For Investors, Jeremy Siegel [2005]

1992-2003 Real GDP Growth [total return]
China 86%
Brazil -6%

1992-2003 stock returns
China -10% per year
Brazil over 15% per year





Again, the whole growth vs value effect. The slower the economic growth and expectations of a firm/country were, the lower priced its shares were, and the higher the investor returns were.

- Alec

Be interested in knowing China and Brazil stock market returns 2003 to date.

 

[ats5g]

Be interested in knowing China and Brazil stock market returns 2003 to date.

I was wondering that myself, so I went to iShares' site to get return info for:

MSCI Brazil index [EWZ]

FTSE China 25 Index [FXI]

MSCI Hong Kong index [EWH]

MSCI Taiwan Index [EWT]

        [FONT=Arial]1 yr          [/FONT][FONT=Arial]3 yr         [/FONT][FONT=Arial]5 yr[/FONT]
[FONT=Arial]EWZ      [/FONT][FONT=Arial]79.56%     [/FONT][FONT=Arial]59.81%    [/FONT][FONT=Arial]64.07%[/FONT]
[FONT=Arial]FXI         [/FONT][FONT=Arial]55.99%     [/FONT][FONT=Arial]49.01%    [/FONT][FONT=Arial]46.77%[/FONT]
[FONT=Arial]EWH     [/FONT][FONT=Arial]41.20%      [/FONT][FONT=Arial]25.89%    [/FONT][FONT=Arial]28.06%[/FONT]
[FONT=Arial]EWT       [/FONT][FONT=Arial]8.38%      [/FONT][FONT=Arial]11.42%    [/FONT][FONT=Arial]16.43%[/FONT]

Note: these are the returns for the indices as of 12/31/2007 b/c FXI wasn't incepted until 10/2004.

I wonder if Chinese stocks went from Growth to Value from 92-03? Kind of like Intel today.

- Alec

 

[Dude]

Vanguard used to recommend 20% of equity. Got their quarterly report in mail yesterday and it had their latest "position". Basically 20% is the floor and can be up to 50%

Which report was this? Was it for a particular fund? Do you know if it is available on their web site? Thanks.

 

[LOL!]

Two Vanguard reports wrote about this. A recent one refers to the earlier one. See Figure 9 in https://institutional.vanguard.com/iwe/pdf/portfolioconstruction.pdf

 

[WilliamG]

Dude - LOL! has pointed you to a very good article. The specific article I was referring to was in Vanguard's quarterly info mailing to Vanguard investors. I looked online but was unable to find a linkable version....