International Investing Options

MJG

Hi Guys,

Most financial wizards recommend that some portion of our portfolios should be invested in foreign markets. The obvious question is which markets? There is no obvious answer and it is likely that the answer morphs over time anyway.

I have always liked the checkerboard presentation of returns data over time as a nice statistics summary. If patterns exist, they always escape my interpretations. Here is a Link that presents returns for various countries in that checkerboard format:

https://novelinvestor.com/international-st

Here is a Link to a more recent 2017 detailed report on international market performance as compiled by Credit Suisse:

https://publications.credit-suisse.com/tasks/render/file/?fileID=B8FDD84D-A4CD-D983-12840F52F61BA0B4

Enjoy. I hope you find these references useful when making your investment decisions.

Best Regards

Puddnhead

Hi MJG,
Does global count as international? Because that's mostly what I own. There are no excuses....the dollar....interest rates......politics, etc. Go where you will. Do what you must, but just win, baby! Or will find someone else who can do the Al Davis type of investing.
God bless
the Pudd

Derf

@Puddnhead: He had some good teams & Then some bad ones.
Are we on the same page on should I contact Duke?
Derf

Ted

@MFO Members: Here is a 2014 Vanguard Study on the subject;
Regards,
Ted
Global Equitirs: Balancing Home Bias And Diversification:
https://personal.vanguard.com/pdf/ISGGEB.pdf

MJG

Hi Ted,

Thanks very much for this excellent Vanguard study reference. It is a nice supplement to the Credit Suisse study that I referenced earlier. A diversity of perspective is always useful to provide a welcomed.balance.

The Vanguard work looks at a ton of what-if scenarios. Note its emphasis on portfolio volatility in terms of standard deviation. The study demonstrates the benefits of diversification, but also it shows relatively little sensitivity of those benefits as a function of the percent of foreign holdings. The parametric plots show rolling hills rather than cliffs. And the benefits seem to be decreasing in recent years. The world is becoming more tightly correlated with increasing trade and communication. Globalization is happening.

Thank you again for your find and Link. I,would expect nothing less from a Marine, and my expectations are never disappointed.

Best Wishes

Nick_de_Peyster

"... The obvious question is which markets?" I disagree. I think the first question is how much outside of the US?

Nick de Peyster
Undervalued Stocks

BobC

A look at current world GDP numbers would suggest at least half, if not more of a person's equity investments should be invested outside the U.S. But because of the multi-national nature of many large companies throughout the world, it is difficult to determine what is domestic and what is international. About 70% of KO revenue comes from outside the U.S. Most revenue for NSRGY comes from outside Switzerland.

Current prices would tell us that valuations are much better outside the U.S. But there are so many things beside valuations to consider, including political and currency risk.

Global stock funds might be a way to dip toes into the water for those who have not done so before. The fact remains, however, that all the fear mongering about international and emerging markets has not kept both from out-performing domestic stocks in quite a few actively-managed funds. This is especially true with international-EAFE stocks. Emerging market index funds are doing quite well, and a number of actively-managed funds in that category are also good. For many investors, it may be appropriate to consider looking at options with relatively low volatility.

VintageFreak

I think emerging markets up like 25 - 30% in last 6 months. Whatever rudimentary understanding I have, unless $USD breaks down meaningfully I don't see any point in overweighting emerging markets. I have some positions which I'm looking to reposition into others and possibly add. Hopefully I'll have opportunity to sell and then buy at lower prices.

I think in a "diversified" portfolio, if we think 30% allocation should be international, then 20% of that perhaps should be emerging markets. So as an example, out of a $100,000 portfolio, $6,000 should be in emerging markets.

Do any of us have more in emerging markets, now or at any other point? I have some money in MALOX and PASDX in my retirement accounts that's meaningful. I own some GPROX and PLMDX also. My meaningful positions are MACSX and MAPIX. I don't think I'm even 3% in emerging markets. Need to check.

BobC

Among the international funds we use, depending on risk target of the account: SFNNX, ACWX for Index/ETF core, then ICEIX, SGOVX, OAKIX. Might also take a look at SFILX for small cap. We have some additional international exposure with TIBIX, RPGAX, MALOX.

willmatt72

I've had very good performance with FMIJX and SFGIX. Two excellent funds, IMHO.

Old_Joe

@willmatt72- I'll second you on that.