A Simple Portfolio [Equity Allocation]

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Do you allocate equities 50% to US and 50% to International?

Yes - I allocate equities 50% US and 50% International.
25
23%
Yes - I plan on moving equities to this allocation.
3
3%
No - I allocate equities with a different percentage and do not plan to change.
79
72%
No - I do not allocate any equity to International.
3
3%
 
Total votes: 110

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A Simple Portfolio [Equity Allocation]

Post by abuss368 »

I have read some posts lately where Bogleheads are noting they are simply dividing their equity allocations 50% US and 50% International.

This does represent more of the market weights and not as much home bias. I would expect this to follow the Boglehead philosophy of simplicity and diversification. Investment literature often tells us the expected returns over the long term should be about the same.

How many Bogleheads allocate their equities as such or are in the process of moving (or considering moving) to this simple half and half allocation.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: A Simple Portfolio

Post by midareff »

My answer is yes, but no. The equity side of my portfolio has 6 equally weighted slices. US, US SV, TInt, TSInt (VSS), REITS, Health Care. Since REITs and HC are predominately US, I say NO. Since US and Int are equally weighted I say YES.
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Re: A Simple Portfolio

Post by abuss368 »

It seems like it would be easy to rebalance and maintain.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: A Simple Portfolio

Post by John3754 »

abuss368 wrote:It seems like it would be easy to rebalance and maintain.
I keep 70/30 US/Int...how is 50/50 any easier to rebalance and maintain than 70/30?
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Re: A Simple Portfolio

Post by midareff »

abuss368 wrote:It seems like it would be easy to rebalance and maintain.
Everything is on a programmed spreadsheet (excel) and provides variances in % and $ from target. When a particular asset (equity or bond) is 10% off at a monthly close (from the paper on Opportunistic Rebalancing) it is adjusted. It is a simple, mechanical and unemotional process.
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Re: A Simple Portfolio

Post by yukonjack »

I hold VTIAX at between 25% and 30% of equities. I arrived at this range primarily on the advice of the Vanguard website as well as what seems to be sort of the unofficial average of bogleheads.
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Re: A Simple Portfolio

Post by Bracket »

I hold 30% of equities in international because of that Vanguard paper that says holding 30% gives you something like 90% of the diversification benefit. Some Boglehead authors also recommend 30% as sort of good starting point for int'l.
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Re: A Simple Portfolio

Post by pastafarian »

Edit-- uh, never mind.
Last edited by pastafarian on Mon Feb 24, 2014 8:58 pm, edited 1 time in total.
Rodc
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Re: A Simple Portfolio

Post by Rodc »

Yes and no for me too . How about "sort of"? :)

12.5% US TSM
12.5% US SCV
7.5% US REITS
32.5% US total

20% TSM x-US
7.5% Int SCV (fundamental index, so not a great choice, if had a better choice would be closer to even split like US)
27.5% x-US total

Depending how you want to factor in US REITS I am either over or under weight US stocks relative to international.

Tell me how to vote. :)

FWIW: I personally don't think the particular choice within a wide range is likely to matter a lot. If over the next X years US beats International those who lean US will come out ahead. But if over the next X years international beats US, those that lean Int will come out ahead. For the most part. There will likely be some very modest benefit due to correlations less than one, mostly showing up a small reduction in volatility, for those will at least a modest amount of each. Personally on the outside chance one or the other somehow tanks while the other does not, I would not go 100% either (though it would be unusual for either to tank and not to some degree take down the other).
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: A Simple Portfolio

Post by RyeWhiskey »

The entire equity portion of my portfolio is held in the Total World Stock Index. So, yes my domestic/international allocation is about 50/50 but no, I didn't do it on purpose, but yes, I kind of did. :beer
This post was brought to you by Vanguard Total World Stock Index (VTWSX/VT).
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Re: A Simple Portfolio

Post by MoonOrb »

My equities are held in a 2:1 ratio of US to Int'l--just as easy for me to rebalance as 1:1.
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Re: A Simple Portfolio

Post by pezblanco »

The philosophy that I"m trying to follow is to tilt towards small and value across US, ex-US developed, and Emerging Markets. I currently hold 60-40 US/ex-US ... I'm moving to 50/37/13 US/ex-US/EM ..... that seems to be more or less the world market capitalization and thus no tilting towards one market or another.
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Re: A Simple Portfolio

Post by siamond »

I answered 'no' because of my 10% position in REITs, but if I were to exclude those, I am indeed at 50/50...
Code Commit
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Re: A Simple Portfolio

Post by Code Commit »

60/40 US/International, as I felt both Vanguard's 70/30 and more market like 50/50 had some good arguments and I could not make up my mind. So, I split it and intend to stay here.
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Re: A Simple Portfolio

Post by dimideme »

I do a 50/50 split. It's a compromise between holding market weight (which was 40/60 last time I checked?) and following Vanguard's recommendation. It also makes it easy to allocate my new dollars to the side that's been lagging behind.

edit: the Vanguard paper cites 46/54 as the US/Intl weighting as of Dec 31 2011. Anyone know where more recent data can be found? The Vanguard Key Benchmark Statistics page does not seem to include emerging markets.

edit 2: composition of Vanguard Total World indicates US equities as 49% of total - I think that's the best answer I could ask for.
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Re: A Simple Portfolio

Post by Throckmorton »

In ancient times, 1980's I used VG co-mingled Trustees International 10 -20%. Post 2006 I've gone even more simple - VG Target 2015 and let them do the work.
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Re: A Simple Portfolio

Post by Day9 »

Regarding Total World Stock Index: When will admiral shares be available? I want to simplify my portfoloio but I can't justify buying this instead of lower cost admiral share Total Stock and Total International
I'm just a fan of the person I got my user name from
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Re: A Simple Portfolio

Post by abuss368 »

Day9 wrote:Regarding Total World Stock Index: When will admiral shares be available? I want to simplify my portfoloio but I can't justify buying this instead of lower cost admiral share Total Stock and Total International
Didn't the book Elements of Investing recommend a two fund portfolio comprised of Total World and Total Bond?
John C. Bogle: “Simplicity is the master key to financial success."
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Re: A Simple Portfolio

Post by linuxizer »

Let's just look this up here on the ole' IPS. Why, yes. Age in bonds; stocks divided 50/50 US/International. Nice and simple.
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Re: A Simple Portfolio [Equity Allocation]

Post by LadyGeek »

I let Vanguard do the work and match the allocations in the target retirement funds. See: Approximating Vanguard target date funds

(I retitled the thread.)
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Re: A Simple Portfolio [Equity Allocation]

Post by vested1 »

I just rolled from Fidelity to Vanguard to a 3 fund portfolio. Stocks are 60% with Total US as 45% and Total Int as 15%. Vanguard rep told me yesterday their most recent position recommended Int between 20% and 40%. There are so many US companies that are heavily diversified in foreign countries now that the Total US stock has a good representation in INT anyway.
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Re: A Simple Portfolio [Equity Allocation]

Post by abuss368 »

vested1 wrote:I just rolled from Fidelity to Vanguard to a 3 fund portfolio. Stocks are 60% with Total US as 45% and Total Int as 15%. Vanguard rep told me yesterday their most recent position recommended Int between 20% and 40%. There are so many US companies that are heavily diversified in foreign countries now that the Total US stock has a good representation in INT anyway.
Makes a lot of sense. I have noticed a change in Vanguard's communication over the last year from their articles, blogs, webcasts, etc. There is a often noted recommendation of 20% - "up to world market weights".

World market weight is somewhere around 60% and always fluctuates. Hence the 20% - 60% lead us to select the middle at 40%. The Vanguard research report showing the benefits peaked at 30% - 40% - they were practically the same.

I will not be surprised if this is the next change to the Target or Life Strategy funds.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: A Simple Portfolio [Equity Allocation]

Post by Random Musings »

Currently, I'm at 60/40, above the 70/30 that the Target funds utilize. I think that is in the sweet spot range.

Have I thought about 50/50 - yes - will I change my IPS to reflect a more globalized weighting - not sure - but if I do, I'll probably do it over a period of time.

For now, inertia will rule.

RM
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Re: A Simple Portfolio [Equity Allocation]

Post by abuss368 »

Random Musings wrote:Currently, I'm at 60/40, above the 70/30 that the Target funds utilize. I think that is in the sweet spot range.

Have I thought about 50/50 - yes - will I change my IPS to reflect a more globalized weighting - not sure - but if I do, I'll probably do it over a period of time.

For now, inertia will rule.

RM
That is where I am at. I am presently happy with 60% US and 40% International. Maybe in the future I will be 50% US and 50% International, but for now I am happy with the allocation.

I don't think it is a big deal as I am going to keep investing in the same asset classes. The question is the allocation between the two.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: A Simple Portfolio [Equity Allocation]

Post by gkaplan »

45%: Domestic Equity
55%: Foreign Equity
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Re: A Simple Portfolio [Equity Allocation]

Post by abuss368 »

gkaplan wrote:45%: Domestic Equity
55%: Foreign Equity
Do you hold the Total World fund?

How did you arrive at the allocation? Market weights?
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Re: A Simple Portfolio [Equity Allocation]

Post by Trek9 »

We are at 35% international, but trying to determine if moving towards 50% is advantageous. There seems to be good arguments for both world weights and the commonly referenced 30%, so it's hard to decide.
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Re: A Simple Portfolio [Equity Allocation]

Post by basspond »

Have to also realize that a lot of US companies have international presence. I don't count that but it affects why I don't have a higher foreign allocation.
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Re: A Simple Portfolio [Equity Allocation]

Post by YDNAL »

basspond wrote:Have to also realize that a lot of US companies have international presence. I don't count that but it affects why I don't have a higher foreign allocation.
That is a very weak argument against holding a representative Global portfolio. "A lot of NON-US companies" have US presence.
abuss368 wrote:I have read some posts lately where Bogleheads are noting they are simply dividing their equity allocations 50% US and 50% International....

How many Bogleheads allocate their equities as such or are in the process of moving (or considering moving) to this simple half and half allocation.
I hold personally 50/50 US/non-US which now happens to approximate Global weights - currently 49/51 US/non-US per FTSE Global All Cap Index. The Global split fluctuates, my allocation doesn't.
THIS is Larry Swedroe's take on this particular issue.
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Re: A Simple Portfolio [Equity Allocation]

Post by gkaplan »

abuss368 wrote:
gkaplan wrote:45%: Domestic Equity
55%: Foreign Equity
Do you hold the Total World fund?

How did you arrive at the allocation? Market weights?
I don't hold the Total World Fund. I have split my foreign equity among the following four funds:

Vanguard European Stock Index Fund Admiral Shares – Roth IRA
Vanguard Pacific Stock Index Fund Admiral Shares – Roth IRA
Vanguard FTSE All-World ex-US Small-Cap Index Fund – Roth IRA
Vanguard Emerging Markets Stock Index Fund Admiral Shares – Roth IRA

I did not arrive at my allocation through market weights. I just tried to come up with an elegant foreign equity allocation within a 60/40 Equity/Fixed Income.
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Re: A Simple Portfolio [Equity Allocation]

Post by Sconie »

I 'do' 60%/40% equity/fixed and within equity 60% domestic/40% international.
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Re: A Simple Portfolio [Equity Allocation]

Post by abuss368 »

Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
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Re: A Simple Portfolio [Equity Allocation]

Post by dbr »

abuss368 wrote:Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
Hardly, other than that dividing by two is a popular response to having no obviously better choice.

If you are asking if there is some analysis that used to support a different allocation for US investors and now suggests some good reason to divide by two, then I haven't seen it. My not having seen it proves little, however.
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Re: A Simple Portfolio [Equity Allocation]

Post by G-Money »

abuss368 wrote:Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
I don't think so.

Prior polls show roughly the same % of respondent's (~75%) put less than 50%/market weight in international stocks:

http://www.bogleheads.org/forum/viewtop ... &p=1783030 (Aug 2013)
http://www.bogleheads.org/forum/viewtop ... 0&t=103617 (Oct 2012)
http://www.bogleheads.org/forum/viewtop ... =1&t=91132 (Feb 2012)
http://www.bogleheads.org/forum/viewtopic.php?t=70974 (Apr 2011)

I'm sure I've missed some other polls.
Don't assume I know what I'm talking about.
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Re: A Simple Portfolio [Equity Allocation]

Post by abuss368 »

G-Money wrote:
abuss368 wrote:Is it fair to say 50% US and 50% International is becoming more accepted and popular as an investment allocation?
I don't think so.

Prior polls show roughly the same % of respondent's (~75%) put less than 50%/market weight in international stocks:

http://www.bogleheads.org/forum/viewtop ... &p=1783030 (Aug 2013)
http://www.bogleheads.org/forum/viewtop ... 0&t=103617 (Oct 2012)
http://www.bogleheads.org/forum/viewtop ... =1&t=91132 (Feb 2012)
http://www.bogleheads.org/forum/viewtopic.php?t=70974 (Apr 2011)

I'm sure I've missed some other polls.
Good point. I am 60% US and 40% International and plan to stay the course.
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Re: A Simple Portfolio [Equity Allocation]

Post by Groundhog »

My IPS says 2/3 US and 1/3 Int'l.
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Re: A Simple Portfolio [Equity Allocation]

Post by abuss368 »

A very informative an excellent thread thus far indeed!

Thanks Bogleheads!!!
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Re: A Simple Portfolio [Equity Allocation]

Post by basspond »

YDNAL wrote:
basspond wrote:Have to also realize that a lot of US companies have international presence. I don't count that but it affects why I don't have a higher foreign allocation.

That is a very weak argument against holding a representative Global portfolio. "A lot of NON-US companies" have US presence.


True, I have some foreign only holdings but not 50%. I am not advocating US over foreign, just that one might have more or less real stake in a market than they realize.
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Re: A Simple Portfolio [Equity Allocation]

Post by pascalwager »

I started out 50/50 in 1995 and I find it hard to change now.
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Re: A Simple Portfolio [Equity Allocation]

Post by sunnywindy »

I am 50/50 (or it at least started out that way) and I think it's now 52/48 favoring the US. I don't have any bonds and I don't plan on re-balancing unless it gets to greater than 60/40 either way. My Dad's job is investing for a foundation and he recommended up to a 50/50 split so that's what I got! I've read that Vanguard thinks any allocation over 40% International doesn't bring in much more return for an unnecessarily increased level of risk. Rick Ferri had a stat on his blog that said International outperforms the US about 40% of the time, so it's better to have the higher weight with the US because it outperforms International 60% of the time.
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