I was originally planning to add EM at market weight, and I’m almost there; I think EM is about 25% of total international.
However, John Bogle has made several statements over the past couple of years suggesting a 50/50 (developed international/EM) split, including most recently at a retirement conference on October 4, 2012.
http://wpfau.blogspot.com/2012/10/john- ... ncome.htmlWade Pfau’s summary of Mr. Bogle’s comments (bold added):
He has never been much into international stock funds. He has a home country bias, as he thinks U.S. companies dominate and the economic system and financial institutions are most stable here. He is not a fan of taking currency risk. Nonetheless, he does not view emerging markets as excessively risky at the current time, and he doesn’t necessarily think that his views about international stocks are appropriate for everyone. He suggests limiting international equity holdings to 20% of the portfolio at most. He doesn’t see high prospects for European countries either. Perhaps 10% in developed markets and 10% in emerging markets for that 20% international allocation.
Also, Vanguard’s Gus Sauter, in an interview published October 6, 2012, stated that his current asset allocation is mostly in U.S. and EM stocks, in a kind of “barbell.” He also said that he has gone from an asset allocation that was about 80% equities 4 years to one that is 90%+ equities now, so he seems pretty positive on stocks generally and U.S. and EM stocks in particular.
As for region, I am widely diversified, but I'm primarily invested in the U.S. and emerging markets, like a little barbell there.
Q. Is that primarily to steer clear of the mess in Europe, or because you like emerging markets?
A. Emerging-markets valuations are appealing -- not as appealing as they were in 2003, but they're OK. At the same time, my bet is everything muddles through, and developed markets are just fine as well. Again, there is no correlation between economic growth and equity returns; you are merely being compensated for risk. So I think we will get reasonable returns from equity markets. (bold added)
http://online.barrons.com/article/SB500 ... rticle%3D0
I'm wondering what other Bogleheads are doing. Do you intentionally overweight EM? What percent of your international allocation do you have in emerging markets?