Adding Int'l Index Fund - - - Why?

[pb4uski]

If you have just two funds today (US Stock and US Bond), and you add an Intnl Stock Fund, you increased the number of funds you hold by 50%. If you decided to add an Intnl Stock Fund and an Intnl Bond Fund, you increased the number of funds you hold by 100%. Complexity may not matter yet, but it will bite at some point.

WADR, if 3 or 4 funds = complexity then one should stick to CDs.

 

[OldShooter]

If you have just two funds today (US Stock and US Bond), and you add an Intnl Stock Fund, you increased the number of funds you hold by 50%. If you decided to add an Intnl Stock Fund and an Intnl Bond Fund, you increased the number of funds you hold by 100%. Complexity may not matter yet, but it will bite at some point.

Well, if two equity funds is too much, just hold a total international fund like VTWSX.

Re bonds, I buy individual issues, mostly US govvies. I don't see any point in taking risks on the "low risk" side of my allocation. There is plenty of risk and more upside with equities, so I have no interest in junk, international, etc. on the low risk side of the portfolio. The furthest out on a limb I go is SAMBX, which is maybe 25% of our safe-side portfolio. So international bonds are not of any interest to me. IMO bond funds are a bad deal, but if that is your poison I would suggest switching your equity position to VTWSX and continuing to hold your US bond fund.

 

[DrRoy]

No doubt that the US market has outperformed in the last few years; every dog has his day. But if anything that might indicate that it's the international sector's turn over the next few years as the US regresses to the mean. That's why I don't make sector bets.

I know that in general that should be true, but I was being told the same thing 5 years ago, and 4 years ago, and 3 etc, and the US continued to outperform. Besides, US large caps are already highly exposed to global conditions.

 

[pb4uski]

You need to use a broader time horizon than just the last 4-5 years.... IIRC back in the early 2000s international stocks crushed US stocks for a number of years running.

 

[OldShooter]

You need to use a broader time horizon than just the last 4-5 years.... IIRC back in the early 2000s international stocks crushed US stocks for a number of years running.

Yes.

Here is another way to look at it: If you accept the theory that the US stock market is a rough surrogate for US GDP, the you must also conclude that it cannot sustain a growth rate significantly in excess of world GDP growth. If it did, the US GDP would be becoming a larger and larger share of world GDP, which IMO is not a tenable scenario. Hence, international stocks are likely to at least catch up and, more likely, again have their day in the sun.
My amateur macroeconomics, at least.