What percentage of international do you hold?

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thethinker
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What percentage of international do you hold?

Post by thethinker » Thu Dec 01, 2016 11:49 pm

I have read quite a few points about holding a total international stock fund except US, but the range varies quite a lot. If I could find a common percentage, I think it may be 15%
What percentage do you hold?

And is this 15% of the total portfolio or is it 15% of the equity side of a portfolio - if you'll let me just use that number of 15% as an example.

I assume with the varied information I've read that many people will reply telling me it's a personal opinion but any information which can be offered will be appreciated.
Thanks.

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Re: What percentage of international do you hold?

Post by whaleknives » Fri Dec 02, 2016 12:09 am

I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?
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Re: What percentage of international do you hold?

Post by sperry8 » Fri Dec 02, 2016 12:22 am

whaleknives wrote:I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?


I'm currently at 65/35 because I will take a bit more volatility to get that little bit of extra return shown in the graph. Actually I used to be 60/40 but since US equities have performed so well over the past five years my Int'l allocation has dropped. It'll swing back when Int'l has it's day again (when the US Dollar rise swings back).
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Re: What percentage of international do you hold?

Post by AlohaJoe » Fri Dec 02, 2016 12:26 am

thethinker wrote:I have read quite a few points about holding a total international stock fund except US, but the range varies quite a lot. If I could find a common percentage, I think it may be 15%
What percentage do you hold?


I hold 100% international.

I'm not sure why I should hold 85% of my assets in the Vietnamese stock market just because I live here.

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Re: What percentage of international do you hold?

Post by zaboomafoozarg » Fri Dec 02, 2016 12:46 am

40% international in stocks, 25% international in bonds

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Re: What percentage of international do you hold?

Post by FIREchief » Fri Dec 02, 2016 12:49 am

I was at 13% of my equity allocation, but have been dropping as a) poor performance and b) lack of interest have weighed in. I have lost interest in international, but won't sell out just for the sake of selling out. I think international is the "new Japan." I'll likely be to zero within a year or so. God bless the USA!
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Re: What percentage of international do you hold?

Post by triceratop » Fri Dec 02, 2016 12:51 am

"What percentage of international do you hold?"

My financial investments are quite limited, so I can only say that to 5 decimal places that number is 0.00000%. That is probably true for most on this board.

(Seriously: I hold 50%. But there are many discussions, some currently active, about this)
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Re: What percentage of international do you hold?

Post by bantam222 » Fri Dec 02, 2016 1:19 am

whaleknives wrote:I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?


I don't understand this chart. If 100% US yielded X% over the provided time period, and 100% international yielded Y% over the provided time period, how can owning a mix yield a return higher than x or y in the same time period?

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Re: What percentage of international do you hold?

Post by GreatOdinsRaven » Fri Dec 02, 2016 1:22 am

40% of equities.
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Re: What percentage of international do you hold?

Post by Index Fan » Fri Dec 02, 2016 1:25 am

33% of equities, ~10% of bonds
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Re: What percentage of international do you hold?

Post by stemikger » Fri Dec 02, 2016 1:27 am

I don't hold international in equities or bonds. I am quite happy with my all U.S. two fund portfolio Vanguard Institutional Index Fund and Blackrock U.S. Debt Index Fund (65/35 stocks/bonds). Upon retirement, I plan to hold one fund which would be the Vanguard Balanced Index Fund.

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Re: What percentage of international do you hold?

Post by corner559 » Fri Dec 02, 2016 1:28 am

AlohaJoe wrote:
thethinker wrote:I have read quite a few points about holding a total international stock fund except US, but the range varies quite a lot. If I could find a common percentage, I think it may be 15%
What percentage do you hold?


I hold 100% international.

I'm not sure why I should hold 85% of my assets in the Vietnamese stock market just because I live here.

LOL. It's all relative.

That being the case I'd also be in the same boat, but if asked "What percent non-US equities do you hold?" I'd say roughly 30%. I think the 20% that I often see touted is too low relative to the asset value of the overall US market vs the global market. 30% is my comfort point.

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Re: What percentage of international do you hold?

Post by rixer » Fri Dec 02, 2016 1:37 am

International is 15% of the portfolio.

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Re: What percentage of international do you hold?

Post by gkaplan » Fri Dec 02, 2016 1:41 am

2/3 of my equities are international. That would be forty percent of my overall allocation.
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Re: What percentage of international do you hold?

Post by Iridium » Fri Dec 02, 2016 1:47 am

bantam222 wrote:
whaleknives wrote:I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?


I don't understand this chart. If 100% US yielded X% over the provided time period, and 100% international yielded Y% over the provided time period, how can owning a mix yield a return higher than x or y in the same time period?


I believe the gain is almost entirely due to rebalance bonus. When you own a mix and actively rebalance, then when one asset is performing well, you will sell it to buy your underperforming asset. This has a tendency of causing you to sell high and buy low.

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Re: What percentage of international do you hold?

Post by rrppve » Fri Dec 02, 2016 1:50 am

1/3 of equities are international
I have a small allocation <5% emerging market debt, no other international bonds
Overall 55/45 equities/fixed income

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Re: What percentage of international do you hold?

Post by resurgemus » Fri Dec 02, 2016 3:39 am

I'm 30% of equities, which is 21% overall.

I don't hold any foreign bond funds, and don't plan to. Mostly because my IPS says not to add any additional asset classes (sectors, micro, long bonds, etc...).

It will stay 30% of equities, but the overall percentage will slowly drop as I increase my fixed allocation over the next few decades.

Since I use the TSP I-Fund, I hold some international small and emerging markets in my Vanguard ROTH. I don't remember what the percentages are... between 20-30% of the international slice of the pie, or something like that.
Domestic 42%, Int'l 21%, REIT 7%, Fixed 30%

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Re: What percentage of international do you hold?

Post by JoinToday » Fri Dec 02, 2016 4:00 am

whaleknives wrote:I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?


This chart is comforting. I recently increased my international allocation from 30% to 40%. Makes me feel better about my AA.
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Re: What percentage of international do you hold?

Post by Ari » Fri Dec 02, 2016 4:46 am

I'm 60% International, which is less than I should have, but my domestic Swedish fund has a 0% ER and is hard to resist.
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Re: What percentage of international do you hold?

Post by digarei » Fri Dec 02, 2016 5:59 am

...

International Equities

33% percent of stocks

26% percent of portfolio


International Bonds

20% percent of fixed income

04% percent of portfolio

...
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Re: What percentage of international do you hold?

Post by oldcomputerguy » Fri Dec 02, 2016 6:37 am

As it happens, my IPS calls for my equity side to be split 70/30 domestic/international. (I don't do international bonds.)

You'll see discussion here ranging widely between holding zero international to holding 50/50 domestic/international (the latter being in line with market cap worldwide). I recall reading here that Mr. Bogle and Vanguard seem to find common ground in their philosophies in the neighborhood of 20% international. From what I have read here and elsewhere, more important than the actual percentage you choose is that you stay the course in the face of changing market conditions.
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Re: What percentage of international do you hold?

Post by TomP10 » Fri Dec 02, 2016 7:07 am

Iridium wrote:
bantam222 wrote:
whaleknives wrote:I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?


I don't understand this chart. If 100% US yielded X% over the provided time period, and 100% international yielded Y% over the provided time period, how can owning a mix yield a return higher than x or y in the same time period?


I believe the gain is almost entirely due to rebalance bonus. When you own a mix and actively rebalance, then when one asset is performing well, you will sell it to buy your underperforming asset. This has a tendency of causing you to sell high and buy low.


The shape of the curve is determined by (i) each asset's return, (ii) each asset's std. dev., and (iii) the correlation between the two assets. If the two assets were perfectly correlated you would not see this shape. The originator of this work (Harry Markowitz) won the Nobel Price in Economics in 1990. The shape reflects the return to diversification.
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Re: What percentage of international do you hold?

Post by Jim85 » Fri Dec 02, 2016 7:08 am

17.3% of my Equity portfolio.
8.2% of my total portfolio

0% international bonds

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Re: What percentage of international do you hold?

Post by Da5id » Fri Dec 02, 2016 8:24 am

1/3 of my equities, which works out to about 18% of my overall portfolio being international stocks. 0% of my bond holdings are international, but still might be persuaded that is the wrong approach.

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Re: What percentage of international do you hold?

Post by Grt2bOutdoors » Fri Dec 02, 2016 8:26 am

33% of equities. I've been buying more emerging markets lately.
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Re: What percentage of international do you hold?

Post by livesoft » Fri Dec 02, 2016 8:30 am

The chart is great for somebody invested from 1970 to 2008, but probably not so great for some other times. Which international funds existed in 1970? 1980? Did the current composition of Vanguard Total International Index fund even exist in 2008? I don't think so.

We have about 30% of our total portfolio invested in international equity funds and about 30% of our total portfolio invested in US equity funds. I'll let folks do the other math.
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Re: What percentage of international do you hold?

Post by DetroitRick » Fri Dec 02, 2016 9:46 am

In equities - around 31% (breaks down to about 86% developed, 14% emerging at this moment).
In fixed income - around 18%

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Re: What percentage of international do you hold?

Post by sls239 » Fri Dec 02, 2016 9:52 am

I have 20% of my equities in international. Mostly because well over a decade ago I had to pick a number and I picked 20%.

I've seen the chart, yes, 30% looks better and if I were starting today I might pick 30%. But I don't think it is significant enough to change from 20%.

Anyone have an updated chart? I'd be interested to see how much it changes.

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Re: What percentage of international do you hold?

Post by Da5id » Fri Dec 02, 2016 10:04 am

sls239 wrote:I have 20% of my equities in international. Mostly because well over a decade ago I had to pick a number and I picked 20%.

I've seen the chart, yes, 30% looks better and if I were starting today I might pick 30%. But I don't think it is significant enough to change from 20%.

Anyone have an updated chart? I'd be interested to see how much it changes.


https://www.portfoliovisualizer.com/efficient-frontier

Will give you current chart for whatever asset classes you like. 20% is pretty good if you use the 1982-2016 data set (1982 is earliest int'l data they have it seems on that site). If you do different sets you get different answers.
Last edited by Da5id on Fri Dec 02, 2016 10:07 am, edited 1 time in total.

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Re: What percentage of international do you hold?

Post by bloom2708 » Fri Dec 02, 2016 10:04 am

20% of stocks.

I've contemplated moving to 10% or 0%. But then I revert to doing nothing.

When I picked 20% it seemed reasonable. I might be right or wrong. :annoyed
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Re: What percentage of international do you hold?

Post by Engineer250 » Fri Dec 02, 2016 10:25 am

40% of my total portfolio (45% US total stock market, 10% US REIT, so 55% domestic).

I like that it's close-ish to market weights while still overweighting the US a little bit. I was closer to 20-30% last year but have been increasing my allocation (and am not quite to 40% yet but that's the goal).

I like the diversification, of knowing I won't be in for it if what happens to Japan happens here, and am okay with trading 1 or 2% possible gains the US might do better by in order to have that diversification.

Another TSP-er here stuck with the I Fund so I use a combo of total international, emerging markets, and international small cap in my IRAs. I try to keep emerging and the international small cap close to market weight (~20% and ~5% respectively of my international).
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Re: What percentage of international do you hold?

Post by traveler90 » Fri Dec 02, 2016 10:32 am

30% of equities
0% in bonds

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Re: What percentage of international do you hold?

Post by rbaldini » Fri Dec 02, 2016 10:55 am

whaleknives wrote:I'm at 30% of stocks, based on a trade-off between minimum volatility and maximum return from this chart in the Wiki:

Image

Recommendations here range from 0% from John Bogle to 51% by market cap. Here's a recent thread: Why not use Global Market Cap %'s for Equities?

FYI, I tried to replicate the above graph.

I used S&P 500 data from here: http://pages.stern.nyu.edu/~adamodar/Ne ... retSP.html
And international index data from here: https://www.bogleheads.org/wiki/MSCI_EAFE_index
Used 1970-2015. Included rebalancing.

I found that
(1) Return is maximized by buying 0% international.
(2) Std deviation (one measure of risk) is minimized by choosing 10% international.
So, based on that data, the optimal allocation to international is somewhere between 0 and ~10%. Any higher than that gets you less return with more risk - i.e. bad. Mind you, these are small sample sizes, so there's a lot of uncertainty. Anywhere from 0-30% is basically statistically indistinguishable - and I'd personally take 30% over 0% (right now I'm at about 23%).

Why do I get a different answer? A combination of (1) I probably use different indices than were used in the above plot, and (2) I have 7 more years of recent data (2009-2015), during which domestic outperformed international by a lot.

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Re: What percentage of international do you hold?

Post by analogsavior » Fri Dec 02, 2016 11:08 am

After doing research on here, and reading Vanguard's research for myself, I concluded that between 20-30% of my equity allocation was the range I was comfortable with. I currently hold 25% of my equity in international.

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Re: What percentage of international do you hold?

Post by Grt2bOutdoors » Fri Dec 02, 2016 11:15 am

livesoft wrote:The chart is great for somebody invested from 1970 to 2008, but probably not so great for some other times. Which international funds existed in 1970? 1980? Did the current composition of Vanguard Total International Index fund even exist in 2008? I don't think so.

We have about 30% of our total portfolio invested in international equity funds and about 30% of our total portfolio invested in US equity funds. I'll let folks do the other math.


I thought your asset allocation was 65/35, is the other 5% in REIT?
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Re: What percentage of international do you hold?

Post by MI_bogle » Fri Dec 02, 2016 11:28 am

At the moment, 20% of my equities are international, which is about 17% of my total portfolio.

I'd like to get to 30% of equities as international but asset location and fund availabilty/outrageous ER's in a couple of my tax advantaged accounts are preventing me from going that route at the moment.

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Re: What percentage of international do you hold?

Post by Van » Fri Dec 02, 2016 11:42 am

20% of my equity allocation is in international (FTSE ex-US). I have no particular reason for the 20% number.

0% of my bond allocation is in international.

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Re: What percentage of international do you hold?

Post by Rodc » Fri Dec 02, 2016 11:49 am

That chart is a wonderful example of how to lie with statistics (or misinform, in this case accidentally as I know this was not the intent).

To begin, if you were to graph this properly, with (0,0) at the origin and not (17.0%, 8.7%) you would see the variations in this graph are tiny.

Over the entire graph the return varies +/- 0.2% of the mean! And from 100% US to 30% the volatility varies just over +/- 1% of the mean! No one is even going to notice that difference in volatility.

This graph says that it really has not mattered much at all what your allocation was, and if the graph were properly made this would be clear. Instead the tiny differences look big because the graph is made by zooming in at high magnification.

Moreover if you look at the page where this comes from you see that over different time periods of significant length the performance can be very different - smoothing by averaging of a long period hides a great deal of important information.

There is absolutely no way one should take this graph and simply pluck off the "optimal" allocation.
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Re: What percentage of international do you hold?

Post by rbaldini » Fri Dec 02, 2016 11:52 am

Rodc wrote:Moreover if you look at the page where this comes from you see that over different time periods of significant length the performance can be very different - smoothing by averaging of a long period hides a great deal of important information.

I assume he used all the data that was available. Sure, one can always cherry pick by using a time period that is favorable to one or the other. But that would be bad - just be fair and use all the data.

As for the time period - when you add the last 7 years that have been realized since 2008, it suggests a lower optimum for international, as I explained above (about 10%). But you are right that the differences are small, especially given that they are only statistical estimates. Anything from 0-30% looks almost indistinguishable.
Last edited by rbaldini on Fri Dec 02, 2016 11:54 am, edited 1 time in total.

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Re: What percentage of international do you hold?

Post by Rodc » Fri Dec 02, 2016 11:53 am

To answer the OP, I am 55/45 US/International stocks and about 80/20 for bonds.

Is that optimal? No idea.
Last edited by Rodc on Fri Dec 02, 2016 1:00 pm, edited 1 time in total.
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Re: What percentage of international do you hold?

Post by Rodc » Fri Dec 02, 2016 11:56 am

rbaldini wrote:
Rodc wrote:Moreover if you look at the page where this comes from you see that over different time periods of significant length the performance can be very different - smoothing by averaging of a long period hides a great deal of important information.

I assume he used all the data that was available. Sure, one can always cherry pick by using a time period that is favorable to one or the other. But that would be bad - just be fair and use all the data.

As for the time period - when you add the last 7 years that have been realized since 2008, it suggests a lower optimum for international, as I explained above (about 10%). But you are right that the differences are small, especially given that they are only statistical estimates.



I am not suggesting cherry picking. But I do think it is a mistake to not look at sub-periods to get better understanding of sensitivity. And that data is side by side with the chart provided in the site wiki.


That is the take away.
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Re: What percentage of international do you hold?

Post by rbaldini » Fri Dec 02, 2016 12:01 pm

Rodc wrote:
I am not suggesting cherry picking. But I do think it is a mistake to not look at sub-periods to get better understanding of sensitivity. And that data is side by side with the chart provided in the site wiki.


That's fair - I wouldn't discourage anyone from looking at the data in greater detail. But if one wants to arrive at a single optimum, one has to use all the data to come up with an answer (or perhaps some reasonable subset of the data, without cherry picking). You might say "there is no single optimum", but that's just a difference of opinion. One still needs to choose his/her single portfolio, after all. All the points about the minuscule relative differences and the statistical uncertainty are of course true.

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Re: What percentage of international do you hold?

Post by remomnyc » Fri Dec 02, 2016 12:06 pm

35% of equities, 28% of total in international, of which 2% is international bonds

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Re: What percentage of international do you hold?

Post by ruralavalon » Fri Dec 02, 2016 12:10 pm

We have international stocks at 25% of total stocks, using Vanguard Total International Stock Index Fund.

We have no international bonds.

sls239 wrote:Anyone have an updated chart? I'd be interested to see how much it changes.

I wonder about that too.
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Re: What percentage of international do you hold?

Post by rbaldini » Fri Dec 02, 2016 12:12 pm

ruralavalon wrote:
sls239 wrote:Anyone have an updated chart? I'd be interested to see how much it changes.

I wonder about that too.

See my posts above. Not a plot, but the return optimum becomes 0% international. The risk optimum (lowest risk in std dev) is ~10% international. Basically, the last 7 years have favored domestic, so the total picture has pushed toward domestic. Mind you, my indices may not be exactly what the original guy used.

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Re: What percentage of international do you hold?

Post by Rodc » Fri Dec 02, 2016 12:14 pm

rbaldini wrote:
Rodc wrote:
I am not suggesting cherry picking. But I do think it is a mistake to not look at sub-periods to get better understanding of sensitivity. And that data is side by side with the chart provided in the site wiki.


That's fair - I wouldn't discourage anyone from looking at the data in greater detail. But if one wants to arrive at a single optimum, one has to use all the data to come up with an answer (or perhaps some reasonable subset of the data, without cherry picking). You might say "there is no single optimum", but that's just a difference of opinion. One still needs to choose his/her single portfolio, after all. All the points about the minuscule relative differences and the statistical uncertainty are of course true.


This gets to my common complaint - too many people use point estimates without consideration for the error bars.

If the error bars are huge, or the historical differences are really tiny, then maybe this is not the best source of data for making the decision. Perhaps cost or currency risk or theoretical arguments should for the basis for decision making. For example one might say that instead of using this historical data they will use theory that says to cap weight. Or they might recognize that both are flawed and split the difference and pick something higher than historical but less than cap weight.
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Re: What percentage of international do you hold?

Post by SpringMan » Fri Dec 02, 2016 12:22 pm

Currently 16% of equities is international, only 0% of bonds. Beginning RMDs next year. My plan is to sell bonds in IRA to satisfy RMDs and invest the proceeds, minus federal tax withholding, in more international equities in our taxable accounts, probably buy more FSIVX which we own at Fidelity. Our international is made up of two funds, FSIVX and VSS.
Best Wishes, SpringMan

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jimgour
Posts: 224
Joined: Sun Mar 04, 2007 9:31 pm
Location: New Mexico

Re: What percentage of international do you hold?

Post by jimgour » Fri Dec 02, 2016 12:26 pm

25% of our investments are in "Total International".

That is 33.33333% of our total equity investments.

krannerd
Posts: 107
Joined: Sat Jun 25, 2011 12:05 pm

Re: What percentage of international do you hold?

Post by krannerd » Fri Dec 02, 2016 12:29 pm

International Equity: 27% of all equity, 19% of total portfolio

International Bonds: 0%

Not sure how I got to my target of 25-30% international equity...but think I'll stay about here for a while. After reading this thread...seems like I'm in reasonable company.

Dulocracy
Posts: 2253
Joined: Wed Feb 27, 2013 1:03 pm
Location: Atlanta, GA

Re: What percentage of international do you hold?

Post by Dulocracy » Fri Dec 02, 2016 12:37 pm

I am at 40% of equities in international and 0% of fixed income.

I read a study a while back (Vanguard?) that said 30-40% was ideal. I read another study saying 40-50% was ideal. Both studies agreed that 40% was within the range of ideal, so I went with it. I have not really read up on what they think now (although I understand they lean more international than before), as I also read that staying the course instead of changing one's allocation all the time was more important than what that allocation actually is.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

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