Overlap between domestic and international funds

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RetiredCSProf
Posts: 167
Joined: Tue Feb 28, 2017 4:59 pm

Overlap between domestic and international funds

Post by RetiredCSProf » Sun Jun 03, 2018 10:48 am

My asset allocation goal is to keep about 30% of my equities in international. I am finding this difficult to track in my TRowe tIRA account, as many of their US funds, such as TRP Blue Chip (TRBCX), invest a portion in international companies. I am wondering whether to reduce my goal to account for the overlap, or just ignore it.

PFInterest
Posts: 2586
Joined: Sun Jan 08, 2017 12:25 pm

Re: Overlap between domestic and international funds

Post by PFInterest » Sun Jun 03, 2018 11:08 am

first why would you be in that fund anyways? way too expensive....
mostly would ignore but if most of your funds are mixed then definitely add it up and adjust as needed.

2pedals
Posts: 628
Joined: Wed Dec 31, 2014 12:31 pm

Re: Overlap between domestic and international funds

Post by 2pedals » Sun Jun 03, 2018 11:09 am

I don't think you should ignore it, just remember your 30% is a target. From what I know in boglehead-landville the percent non-US is somewhere in-between 20%-50% so if you add a 30% of non-US funds you should be good in my estimation. Some "extreme" boglehead folks are at 0% non-US and say US many stocks have an international marketplace as well and all US is good enough. Vanguard study said more on this here. When looking at Morningstar for TRBCX they show about 7% non-us. So holding 30% of equity in non-US funds like Vanguard Total International Stock Index Fund (VGTSX) will not make that much difference. The point is IMHO you should have some specific international stock to add diversity to your equity portion.

retiredjg
Posts: 34186
Joined: Thu Jan 10, 2008 12:56 pm

Re: Overlap between domestic and international funds

Post by retiredjg » Sun Jun 03, 2018 11:29 am

This is going to sound stupid, but I think you should ignore it while keeping it in mind.

The amount of your stocks that you have in international is a squishy number at best. Your 30% target is going to wander up and down anyway. Trying to stay at 30% would be like trying to push jello uphill.

Do the actual calculation once and see how far off target the presence of some foreign stocks in your funds pushes things. It probably will not be far, but if it is significant, just reduce the percentage of your non-US funds by a little. In other words, if you want 30% just use about 25% of a non-US fund and assume the other 5% is contained in the funds that have both. If these funds have a very large foreign presence, other numbers might be appropriate.

Other than checking it once a year, I would not pay much attention.

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