Stock asset allocation for non-US investors

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Ambox globe content.svg This article contains details specific to non-US investors. It does not apply to United States (US) investors, or to US citizens and US permanent residents (green card holders) living outside the US.

Within their stock allocation every investor needs to make a number of decisions: - What regional allocation will I adhere to? Do I want global diversification? do I overweight one region? do I overweight my region and introduce a home-bias?

Worldwide or overweighting a region/country

One of Boglehead Principles is to Bogleheads®_investment_philosophy#Diversify Diversify. The principle mentions that rather than trying to pick the specific securities or sub-asset classes of the market that will outperform in the future, Bogleheads buy funds that are widely diversified, or even approximate the whole market.[1]

  • Owning the worldwide stock market would mean to own Large cap, mid cap and small cap of the developed and emerging markets, covering about 98% of the worldwide stock market. This might be difficult as this might require a more complex and more expensive portfolio of multiple funds. Hence sometimes a simpler portfolio is sufficient:
    • Large cap and mid cap of the developed markets : covers about 75% of the wordlwide stock market
    • Large cap and mid cap of the developed and emerging markets : covers about 85% of the worldwide stock market and might be achieved with one or two funds.
  • Home Bias : overweight your country or region

  • Overweighting the US market: Many US Bogleheads overweight the US stock market. This might also be a strategy for the non-US investors

Variations on Boglehead Investing

Next to the mainstream

  • Adding and overweigthing of REITs
  • Adding more asset classes to a portfolio : gold, commodities, ... various sub-asset classes of bonds
  • Tilt to value and small cap
  • Slicing and dicing the market and overweigthing some of them