morningstar X-ray international AA could be better

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
lomarica01
Posts: 271
Joined: Sun Jul 05, 2015 10:57 am

morningstar X-ray international AA could be better

Post by lomarica01 »

With what seems to be all the recent posts about what an appropriate international AA should be I checked mine on morningstar via the X-ray option.

I note a few things and want to see if I am missing anything
1. the % international is based on your total portfolio not the % of equities which is a better way to calculate your international AA
2. you have to manually add up the emerging markets % to get your total em AA
3. North America, not the USA is a specific group so one would have to subtract out Canada to get a more accurate understanding of your non US holdings

Morningstar gave me a 14% foreign AA and I have 50% in equities. Upon further digging I have concluded my more accurate AA is
USA= 73%
International = 18%
EM= 9%
of my total equities.

I did not account for Canada being part of international. for example my Vanguard Energy about 30% international of which some would be in Canada.

I am not saying Morningstar is incorrect in what they are presenting but you need to take extra steps to have an total understanding of your actual international AA including emerging markets.

Any comments appreciated.
User avatar
Doc
Posts: 10606
Joined: Sat Feb 24, 2007 12:10 pm
Location: Two left turns from Larry

Re: morningstar X-ray international AA could be better

Post by Doc »

1) the % international is based on your total portfolio not the % of equities which is a better way to calculate your international AA
(US/F+1)^-1 = Fraction foreign eg: (36/13+1)^-1=0.2653 where 36 is US and 13 is Foreign (I can do that in my head, at least in the morning. :happy )
Alternatively think of Canada as the 51st state and use the world region screen.
2) you have to manually add up the emerging markets % to get your total em AA
On the world regions tab Europe Emerging + Asia Emerging = % emerging
3. North America, not the USA is a specific group so one would have to subtract out Canada to get a more accurate understanding of your non US holdings
On the asset class tab US Stocks are US stocks. On the world region tab Canada and US are combined. Use whichever suits you better. (I prefer Canada to be lumped with US myself.)
Upon further digging I have concluded my more accurate AA ...

Emerging is part of international. (If you want to know EM in international add E emerging and A emerging and divided by the answer in 1)
I did not account for Canada being part of international.
Canada is such a small part of the foreign funds that do include Canada that it can usually be ignored.

Perhaps you are you not using Morningstar Premium?
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
Post Reply