What is your allocation to U.S. and International?

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abuss368
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What is your allocation to U.S. and International?

Post by abuss368 » Sat Nov 24, 2018 3:06 pm

Bogleheads -

In relation to the never ending debate of portfolio allocation, I am interested in thoughts on the allocation between U.S. and International stocks and bonds.

Are there Bogleheads who allocate 50% to U.S. and 50% to International? This could include both domestic and international stocks and also domestic and international bonds. I would except that this allocation has to be the easiest to maintain.

Notably Vanguard investment experts over the years have only gone one way with the allocation to international stocks and international bonds: up! Vanguard recommended 20% of stocks, then 30%, and now the current 40% of stocks to international. On the bond side, Vanguard recommended 20% to international and now the current 30%. It would not surprise me to see Vanguard eventually recommend a 50% U.S. and 50% International allocation on the stock side at some point. It appears that more and more of their funds are going "global" (i.e. Total World, Global Bond). Can the international bond allocation increasing be far behind?

I would think a 50%/50% allocation is a reasonable investment portfolio. Essentially saying no one knows how exactly the stock and bond markets are going to perform so we will split them. The ONLY allocation an investor needs to be concerned with is the overall allocation between stocks and bonds. As Rick Ferri has so often said we all share in the same philosophy we just need to develop our individual strategy.

Thoughts and perspectives please!
Last edited by abuss368 on Sat Nov 24, 2018 3:27 pm, edited 1 time in total.
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Re: What is your allocation to U.S. and International?

Post by BWildt » Sat Nov 24, 2018 3:11 pm

0% international

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Re: What is your allocation to U.S. and International?

Post by oldcomputerguy » Sat Nov 24, 2018 3:16 pm

Equity side, 70/30 domestic/international. No international bonds.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: What is your allocation to U.S. and International?

Post by PFInterest » Sat Nov 24, 2018 3:17 pm

This will not further the debate.
I am X US and Y Intl.
X might = Y

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Re: What is your allocation to U.S. and International?

Post by samsdad » Sat Nov 24, 2018 3:19 pm

My portfolio is my signature. After participating in various international threads I’ve come to the conclusion that, at the end of the day, I don’t want to potentially underperform my home market(s) by investing in something considered completely unnecessary; especially given the US market’s intrinsic international exposure.

Plus, there are people/publications that have an agenda that I don’t agree with that also push for, lately, up to 2/3rds international:US, which I feel is simply foolish.

I freely admit that I might be wrong. I might be hurting myself due to country-concentration risk. But I’d rather have that than the myriad of risks associated with international.

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Re: What is your allocation to U.S. and International?

Post by MJW » Sat Nov 24, 2018 3:21 pm

abuss368 wrote:
Sat Nov 24, 2018 3:06 pm
I would think a 50%/50% allocation is a true Boglehead portfolio.
I have a hard time accepting a purity test for what is a "true Boglehead" when the movement's namesake has (rightly or wrongly) a well-defined opinion on this particular matter. Whether we agree or disagree with Jack Bogle about the merits of international investing, his name is inextricably linked to the group's philosophy. I don't see how a "true Boglehead" can be defined so rigidly as to be at odds with the man's beliefs.

I understand why some object to Mr. Bogle's "buy the haystack" mantra when it allows the investor to eschew a significant portion of the global market, but it seems that we must simply have areas where we can agree to disagree if we are to forge a semblance of community under the Bogleheads umbrella. Jack Bogle is not a prophet, religious leader or cult leader. It's okay for there to be variation in the beliefs and behaviors of the members.

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Re: What is your allocation to U.S. and International?

Post by columbia » Sat Nov 24, 2018 3:22 pm

I’m assuming that VG will eventually offer something called “Global Balanced Fund”, which will be 50 Total World and 50 Global Bond.

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Re: What is your allocation to U.S. and International?

Post by JoMoney » Sat Nov 24, 2018 3:22 pm

abuss368 wrote:
Sat Nov 24, 2018 3:06 pm
... I would think a 50%/50% allocation is a true Boglehead portfolio ...
Does a "true Boglehead portfolio" involve advice inspired by Jack Bogle?
What allocation would disqualify a portfolio from being a "true Boglehead portfolio" ?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: What is your allocation to U.S. and International?

Post by HAWK23 » Sat Nov 24, 2018 3:25 pm

Stocks : Bonds = 88 : 12

Domestic Stock : Int'l Stock = 80 : 20

Domestic Bond : Int'l Bond = 100 : 0

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Re: What is your allocation to U.S. and International?

Post by abuss368 » Sat Nov 24, 2018 3:28 pm

JoMoney wrote:
Sat Nov 24, 2018 3:22 pm
abuss368 wrote:
Sat Nov 24, 2018 3:06 pm
... I would think a 50%/50% allocation is a true Boglehead portfolio ...
Does a "true Boglehead portfolio" involve advice inspired by Jack Bogle?
What allocation would disqualify a portfolio from being a "true Boglehead portfolio" ?
Good point. I have edited my original post to remove "...true Bogleheads portfolio....."
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Re: What is your allocation to U.S. and International?

Post by UpperNwGuy » Sat Nov 24, 2018 3:30 pm

Once upon a time I was 67/33, but I'm now about 77/23. I won't let it go below 80/20. In general, I am disappointed in international stocks. I do not, however, believe that US stocks "give international exposure." That idea just makes no sense to me.

I have no international bonds.
Last edited by UpperNwGuy on Sat Nov 24, 2018 3:39 pm, edited 1 time in total.

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Re: What is your allocation to U.S. and International?

Post by Dandy » Sat Nov 24, 2018 3:33 pm

International equity about 7% of my equity allocation + plus a small allocation within Wellesley Income Fund.
International bond 0% direct but some included in allocation of Short Term Bond fund.

I would add a bit to international equities but I'm at the high point of my equity allocation and RMDs from fixed income heavy TIRA and equity's greater growth will likely keep equities at the high end of my goal.

Don't see the need for international bonds. Look for my fixed income in retirement to provide safety and stability --plenty of choices in US fixed income.

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Re: What is your allocation to U.S. and International?

Post by Dottie57 » Sat Nov 24, 2018 3:35 pm

MJW wrote:
Sat Nov 24, 2018 3:21 pm
abuss368 wrote:
Sat Nov 24, 2018 3:06 pm
I would think a 50%/50% allocation is a true Boglehead portfolio.
I have a hard time accepting a purity test for what is a "true Boglehead" when the movement's namesake has (rightly or wrongly) a well-defined opinion on this particular matter. Whether we agree or disagree with Jack Bogle about the merits of international investing, his name is inextricably linked to the group's philosophy. I don't see how a "true Boglehead" can be defined so rigidly as to be at odds with the man's beliefs.

I understand why some object to Mr. Bogle's "buy the haystack" mantra when it allows the investor to eschew a significant portion of the global market, but it seems that we must simply have areas where we can agree to disagree if we are to forge a semblance of community under the Bogleheads umbrella. Jack Bogle is not a prophet, religious leader or cult leader. It's okay for there to be variation in the beliefs and behaviors of the members.
So agree.

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Re: What is your allocation to U.S. and International?

Post by truenorth418 » Sat Nov 24, 2018 4:45 pm

65 stock 35 bond

Stock 60 US 40 Ex-US

Bond 100 US

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Re: What is your allocation to U.S. and International?

Post by GAAP » Sat Nov 24, 2018 5:15 pm

Approximately 50/50 per asset class, given that I use VT (total world ETF) for equity, and a 50/50 mix of BND/BNDX for bonds. If I were starting today, I would use BNDW (total world bond) instead. My Equity to Fixed Income ratio is 70/30.

With the interconnected financial world that we have today, I just assume that the overall monetary resources will ebb and flow into those four basic asset classes. By choosing the broadest possible definitions, I don't have to worry about which tide is up at the moment. That in turn leaves the single decision of how much equity risk premium to accept/require.

As I've said elsewhere, I'm lazy...

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Re: What is your allocation to U.S. and International?

Post by abuss368 » Sat Nov 24, 2018 5:29 pm

GAAP wrote:
Sat Nov 24, 2018 5:15 pm
Approximately 50/50 per asset class, given that I use VT (total world ETF) for equity, and a 50/50 mix of BND/BNDX for bonds. If I were starting today, I would use BNDW (total world bond) instead. My Equity to Fixed Income ratio is 70/30.

With the interconnected financial world that we have today, I just assume that the overall monetary resources will ebb and flow into those four basic asset classes. By choosing the broadest possible definitions, I don't have to worry about which tide is up at the moment. That in turn leaves the single decision of how much equity risk premium to accept/require.

As I've said elsewhere, I'm lazy...
That was where some of my thoughts were originally when I originally stated "true Bogleheads" and then edited. A lot has changed over the years and in my opinion the business and investment world is more connected. Hard to see that ever reversing. For example back in 2005 David Swensen wrote Unconventional Success and was against international bonds and no mention of international REITs. Fast forward almost 14 years later and Vanguard has created a low cost way to invest in both international bonds and international REITs. If for example, Unconventional Success was written today would the recommendations be a little different? I don't know.

Vanguard's Total Bond Index fund has international bonds (issued in U.S. Dollar's in the fund). I am unsure if many folks are aware of that. Vanguard's Total International Bond Index fund has bonds issued by U.S. companies issued in other parts of the world. This would align with your note regarding interconnected financial world and that the overall monetary resources will ebb and flow into those four basic asset classes.
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Re: What is your allocation to U.S. and International?

Post by SGM » Sat Nov 24, 2018 6:26 pm

I have only about 10% of my stock allocation in international. I have listened to Jack discuss this issue many times. It doesn't bother me that I don't have the whole haystack. After having been 100% stock in most of the accumulation stage I now am about 60/40 stock to bond. My portfolio supplements my rental, annuity and delayed SS income in retirement. I never considered myself a doctrinaire BH although my portfolio has been getting simpler and concentrated more in low cost index funds for the last 10 years or so.

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Re: What is your allocation to U.S. and International?

Post by Northern Flicker » Sat Nov 24, 2018 7:25 pm

Is there any reason to expect this discussion to contribute anything not already covered in other threads, such as:

viewtopic.php?t=196956
Taking a break from Bogleheads.

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Re: What is your allocation to U.S. and International?

Post by MJW » Sat Nov 24, 2018 9:32 pm

jalbert wrote:
Sat Nov 24, 2018 7:25 pm
Is there any reason to expect this discussion to contribute anything not already covered in other threads, such as:

viewtopic.php?t=196956
I think abuss is just asking for an updated tally on what people are actually doing versus instigating another debate on the topic.

Of course, the most likely outcome is another debate. But hey, you never know -- this could be the one where we finally settle the matter for all times and we all go forth in peace.

:|

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Re: What is your allocation to U.S. and International?

Post by oldzey » Sat Nov 24, 2018 9:35 pm

As a U.S. investor, I hold 75% U.S. equities and 25% U.S. fixed income.

So, 0% international for me! :beer

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Re: What is your allocation to U.S. and International?

Post by nisiprius » Sat Nov 24, 2018 9:43 pm

Within my stock allocation, it's currently, let me see, 78% US, 22% international. Many years ago it was 20% international, listening to people in the forum made me decide to add just a bit more, I had it up to 25% international, and since then the relative performance of the two has gradually reduce it to 22%. I don't plan to do anything about it. If it gets below 20% I'll rebalance it to 20% or so.

There's no very good reason for this and it's not a recommendation for anyone else.

I don't think it matters much. I didn't feel comfortable being way out of the mainstream, and I thought 0% international was way out of the mainstream. Because of only having 25% it hasn't bothered me much to see a period of underperformance. If I were at global cap weight, i.e. about 50/50, I think I'd be somewhat bothered right now. So where I am is a place where I find it possible to stay the course.
Last edited by nisiprius on Sat Nov 24, 2018 9:49 pm, edited 1 time in total.
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Re: What is your allocation to U.S. and International?

Post by AerialWombat » Sat Nov 24, 2018 9:47 pm

As of last Monday, I went to 0% international stocks, but it had nothing to do with the debate between US and ex-US. Rather, it had to do with reducing stock exposure entirely.

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Re: What is your allocation to U.S. and International?

Post by Random Musings » Sat Nov 24, 2018 9:49 pm

For a while, I have been 30% too high on my international exposure on the equity side.

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Re: What is your allocation to U.S. and International?

Post by fennewaldaj » Sat Nov 24, 2018 10:12 pm

stocks 78 bonds 22

in stocks 50 % US 50% ex-US

Bonds ~85% US 15% ex US mainly emerging market (not counting yankees as foreign)

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Re: What is your allocation to U.S. and International?

Post by ThePrince » Sat Nov 24, 2018 10:22 pm

VT+BNDW.

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Re: What is your allocation to U.S. and International?

Post by abuss368 » Sat Nov 24, 2018 10:32 pm

jalbert wrote:
Sat Nov 24, 2018 7:25 pm
Is there any reason to expect this discussion to contribute anything not already covered in other threads, such as:

viewtopic.php?t=196956
Thank you for your thoughts and perspective. :beer
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Re: What is your allocation to U.S. and International?

Post by heyyou » Sat Nov 24, 2018 10:42 pm

allocation to U.S. and International?
So far, 50/50 for stocks has been adequate for my needs for the last two decades.
Others are welcome to do whatever suits them.

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Re: What is your allocation to U.S. and International?

Post by privatefarmer » Sat Nov 24, 2018 10:54 pm

BWildt wrote:
Sat Nov 24, 2018 3:11 pm
0% international
Same here. After researching some on taxation, INTL is without a doubt more expensive. I cannot seem to find good data in just how much more expensive, but I did find that the foreign tax credit does not fully reimburse foreign taxes paid if they are more than what you’d have paid in the US.... seems complex but I think there are a lot of hidden costs with INTL such as taxes, transaction costs, etc that we can avoid in the US.

As far as currency risk, multinational companies headquartered in the US sell ~40% of their products overseas. So they are already exposed to currency risk. If 40% of profits from these companies are coming overseas it seems to me that one is already adequately exposed to the global economies / currencies. And over the last 20 years, INTL equities have been about 90% correlated with domestic.

I think if one owns domestic TSM they are already adequately exposed to the international economies and in a much cheaper way.

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Re: What is your allocation to U.S. and International?

Post by friar1610 » Sat Nov 24, 2018 11:29 pm

Overall allocation at the moment 43% equity/57% fixed.
Of equity, 21% is international. My comfort range is 20%-25%.
Of fixed, 0% is international. Unsure what my comfort range would be if I thought there were a strong case to own international fixed income. But I don't so that's moot.
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Re: What is your allocation to U.S. and International?

Post by andrew99999 » Sat Nov 24, 2018 11:48 pm

The problem with 50/50 is the same problem as 60/40 and 70/30. They all depend on reversion to some sort of mean.
Look at the US proportion from 1900. It was around 15% of the world markets. If you then decided then 15:85 was the "correct" long term ratio and rebalanced it back to that each year, you would have missed out on a lot of money.
The other way would be to use market capitalisation and let the market determine it.
Or you could do a combo. I quite like the idea of 25% home country + 75% global cap weighted. For US this comes to around 2:1 but will still sway in the direction of market cap changes.

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Re: What is your allocation to U.S. and International?

Post by WanderingDoc » Sun Nov 25, 2018 12:11 am

55:45 U.S./Int'l.

Tempting to jump ship to all U.S. like others have done recently.
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Re: What is your allocation to U.S. and International?

Post by Index Fan » Sun Nov 25, 2018 12:12 am

25% of equities are int'l. Used to be 33% but I haven't rebalanced and haven't felt the need to do so.
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Re: What is your allocation to U.S. and International?

Post by visualguy » Sun Nov 25, 2018 12:32 am

0% international. It was around 25% in the mid-to-late 90s, but then I bailed out on it. Haven't touched it since, but I keep monitoring it. Somewhat surprised by how poorly it has done - didn't think it would do quite so badly in the long run. Definitely made me listen to Bogle more...

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Re: What is your allocation to U.S. and International?

Post by pascalwager » Sun Nov 25, 2018 12:49 am

I have a remaining 23% international in taxable with capital gains. Otherwise, I might exchange for an overall 100% US. I no longer consider international an investable asset and actually haven't for a long time.

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Re: What is your allocation to U.S. and International?

Post by SoAnyway » Sun Nov 25, 2018 1:25 am

abuss368 wrote:
Sat Nov 24, 2018 3:06 pm
In relation to the never ending debate of portfolio allocation, I am interested in thoughts on the allocation between U.S. and International stocks and bonds.
OP, as you stated, the debate is never-ending. And to paraphrase Jack or Taylor or both, when the debate is never-ending, it's probably because it doesn't really matter. I've no interest in "getting into it" with anyone on what the so-called optimal answer is or might be.

To answer your question: Given my current age and personal circumstances, my AA is 60% stock/40% bonds and re-allocating toward 50-50 over the next few years per my plan. The equity component is 80/20 domestic to international and has been for decades going back to when equities were a far higher % of portfolio. I have my reasons. Perhaps I'd have been better off at 100% US or 50% US over those years. I don't know, and I don't care to know. I've no complaints.

EDIT: Oldzey, I'm as red/white/blue as they come but I sincerely hope you're not actually drinking that stuff, lol....
If we're ever in the same geography, as a public service I will happily pick up the tab on introducing you to better alternatives...
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oldzey wrote:
Sat Nov 24, 2018 9:35 pm
As a U.S. investor, I hold 75% U.S. equities and 25% U.S. fixed income.

So, 0% international for me! :beer

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Last edited by SoAnyway on Sun Nov 25, 2018 1:45 am, edited 1 time in total.

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Re: What is your allocation to U.S. and International?

Post by Bungo » Sun Nov 25, 2018 1:42 am

My stock allocation is 50/50 US/international, thus a slight tilt toward the US (market weight would be 43/57) which I justify for the sake of simplicity.

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Re: What is your allocation to U.S. and International?

Post by hoping » Sun Nov 25, 2018 1:44 am

I'm in the US, age 71, and my Asset Allocation is stocks/fixed income: 55%/45%.
40% of stocks are international.
10% of fixed income is international.
All Vanguard. Heavy use of index funds.

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Re: What is your allocation to U.S. and International?

Post by catdude » Sun Nov 25, 2018 2:27 am

stocks / bonds = 55% / 45%

stocks: 80% US / 20% Int'l

No int'l bonds
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Re: What is your allocation to U.S. and International?

Post by asif408 » Sun Nov 25, 2018 8:25 am

10% US/90% international

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Re: What is your allocation to U.S. and International?

Post by Mike Scott » Sun Nov 25, 2018 8:41 am

I don't specifically buy international but I do consider that I have some within the multinational conglomerates which are included in the total stock market funds. For starting out, I have recommended target date funds for my kids but there is not enough international stock or bonds in them to avoid them considering the simplicity of them "managing" a single fund.

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Re: What is your allocation to U.S. and International?

Post by goblue100 » Sun Nov 25, 2018 9:11 am

jalbert wrote:
Sat Nov 24, 2018 7:25 pm
Is there any reason to expect this discussion to contribute anything not already covered in other threads, such as:

viewtopic.php?t=196956
Probably not, but hey, everybody likes to talk about themselves so this thread will get lots of replies. Case in point:
15% international equities, 0% bonds. I had international bonds about 3 years ago, but dumped them and put it in AGG (Ishares total bond, close to BND in duration and allocation)

I will add a few points of international equity on my next re-balance on 12/31.
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Re: What is your allocation to U.S. and International?

Post by lostdog » Sun Nov 25, 2018 9:19 am

WanderingDoc wrote:
Sun Nov 25, 2018 12:11 am
55:45 U.S./Int'l.

Tempting to jump ship to all U.S. like others have done recently.
55:45 U.S./Int'l also.

Are you going to jump back on the ship when international does well? So tempting right?

Recency bias is a helluva drug...

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Re: What is your allocation to U.S. and International?

Post by staythecourse » Sun Nov 25, 2018 9:27 am

I'm 60/40, but then again I'm 100% equity outside of 1 year EF and have large slices in highly volatile asset classes so doesn't bother me for seeing underpeformance in my portfolio.

I will say my allocation to international is NOT ex U.S. developed as I don't see much difference between that at U.S. TSM. It is in more volatile segments (total international mid/ small and EM large).

Good luck.
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Re: What is your allocation to U.S. and International?

Post by dwickenh » Sun Nov 25, 2018 10:44 am

I am 80% US and 20% International. I keep the 20% around for tax loss harvesting and it has worked out well this year. :oops:
I have not changed this allocation for the last 20 years. It creeps up or down sometimes, but seems to stay around 20%.
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Re: What is your allocation to U.S. and International?

Post by fishandgolf » Sun Nov 25, 2018 10:58 am

MJW wrote:
Sat Nov 24, 2018 9:32 pm
jalbert wrote:
Sat Nov 24, 2018 7:25 pm
Is there any reason to expect this discussion to contribute anything not already covered in other threads, such as:

viewtopic.php?t=196956
I think abuss is just asking for an updated tally on what people are actually doing versus instigating another debate on the topic.
+1

I totally agree with MJW; One can go back and reference previous discussions on these topics, but for me.............I appreciate the updates. :sharebeer

Oh.....by the way.....my portfolio is 60/40 with the stock side @ 100% domestic.

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Doc
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Re: What is your allocation to U.S. and International?

Post by Doc » Sun Nov 25, 2018 11:02 am

I don't think of this the way most responders do.

My equity target is 75/25 but that 25 foreign is small developed. Having large international does little for diversity because large US and large foreign are mostly international firms that are all swimming in the same pool. So you get little diversification from large foreign except for currency risk which adds nothing in the long term. I don't use EM because it would be too small a position to have any effect on my total return and I would just use sleep over what's happening with the government of WhatsThatPlace.

I have zero in foreign bonds because bond money easily flows to the country(s) with the best risk adjusted returns so all you are getting is a currency ploy which I've already addressed in my equity remarks.
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.

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Re: What is your allocation to U.S. and International?

Post by Cycle » Sun Nov 25, 2018 11:06 am

66% US (530k) / 34% INT (283k)
85% Stocks (813k) / 15 % Bonds (144k)

I like the idea of being market weight... but try not to fiddle with the AA too much.

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abuss368
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Re: What is your allocation to U.S. and International?

Post by abuss368 » Sun Nov 25, 2018 11:24 am

asif408 wrote:
Sun Nov 25, 2018 8:25 am
10% US/90% international
Hi asif408 -

Is your post correct? You allocate 90% to international stock?

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John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

GAAP
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Re: What is your allocation to U.S. and International?

Post by GAAP » Sun Nov 25, 2018 12:07 pm

andrew99999 wrote:
Sat Nov 24, 2018 11:48 pm
The problem with 50/50 is the same problem as 60/40 and 70/30. They all depend on reversion to some sort of mean.
Look at the US proportion from 1900. It was around 15% of the world markets. If you then decided then 15:85 was the "correct" long term ratio and rebalanced it back to that each year, you would have missed out on a lot of money.
The other way would be to use market capitalisation and let the market determine it.
Or you could do a combo. I quite like the idea of 25% home country + 75% global cap weighted. For US this comes to around 2:1 but will still sway in the direction of market cap changes.
Global weighted is easy to do. Specific ratios are easy to do. Your suggestion sounds reasonable, but I'm not aware of any funds of that sort, making it a repeated manual process. It's a shame really, I suspect that many with a preference against international might like a way to add it to their portfolio in a defined ratio that is automatically managed.

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Re: What is your allocation to U.S. and International?

Post by cody69 » Sun Nov 25, 2018 4:10 pm

My stock allocation is 70/30% US/International... bonds are 100% US.

This came about many years ago when I setup my asset allocation for investing and calculated the risk/return graph for 0%, 10%, 20%, ... 80%, 90%, 100% international allocation, and decided 30% international was the right allocation for my portfolio. This percentage also seemed to match up well with recommendations that were in the literature at the time. I've stuck with it for the past 20 years and plan to maintain this allocation as I switch from accumulation to retirement.

I've not purchased international bonds... this is something I need to learn more about to make an informed decision. Right now, a number of people whom I respect their opinion are not strongly advocating international bonds.

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