Placing Your Investing Chips in the Right CountriesJason Zweig wrote:If you were investing from scratch in the U.S. market, how would you parcel out your money among different kinds of stocks? The logical starting point: Ask how other investors have already allocated their money. Small stocks make up less than 10% of the U.S. market, midsized stocks 20% and large stocks at least 70%. And the market is split just about evenly between rapidly expanding "growth" stocks and cheaper "value" companies. You would deviate from those levels only if you had strong evidence that most other investors had missed something.
You should follow the same principle when you spread your investment dollars across the globe, says Frank Nielsen, a director of index research at MSCI Barra. The weights within MSCI's All Country World index approximate how all the world's investors already have placed their bets: 42% in the U.S., 45% in developed foreign markets, 13% in emerging markets.
Take those numbers as your base line. If you keep more than that in the U.S. and less in developed foreign markets, your bets are skewed. What insights do you possess into the global economy that hundreds of millions of other investors have somehow overlooked?
As an adherent, in general, to the use of market weightings as a starting point for portfolio allocations, these direct challenges resonate with me. They also got me curious.
Does anyone have easy access to the MSCI ACWI market weight breakdown by country?
Also, does anyone have access to the global market breakdown by asset class? (Why stop at just stock styles or world regions?)