I have some international funds that I am looking to shift to index funds. My original thoughts were 30% of my equity portfolio (which is targetted to be 80% of my overall portfolio). The breakdown I started with was
International - 30%
Large value 10%
Small 5%
Small value 10%
Emerging markets 5%
I wasn't sure I wanted it to be 30%, and was thinking that might be a little high. I haven't finished deciding what the mix should be, but my notes (updated more than a month ago) currently indicate that my last thoughts were 5% europe, 5% far east, 5% emerging markets, and 5% unknown yet for a 20% total. Why those? Well I couldn't find index funds for small/large categories outside of DFA, and I guess regions sounded like a way to allocate. Why 5%? no good reason, other than 5% is a nice round number. I'm not sure that a bunch of analysis ala expected return, standard deviation, etc. would improve on it much, and I'm not looking to become an expert in mathamatical analysis of asset allocation.
I plan on looking thru the international index funds and ETF's more carefully in March. (Feb is tax and college stuff month). Based on what I can find out about the composition of them, I'll carefully consider the alternatives, then probably flip a coin and pick some. Any comments on how to distribute the 20% international are welcome. And I may push it up to 25% (which is 20% of total portfolio)
So, I'm targetting the 20% to 30% number, and buying into the belief that it will help stabilize returns by diversifying the portfolio. The number and belief is after reading a number of library books on investing that stress MPT, and describe allocations.
Wayne