If you'd like some help with your investing decisions, here are a couple of ways you can get the answers you need. Scott Donaldson: No. Liz Tammaro: So we are actually almost out of time. And if Greece fails, what will that do to the European markets? Not all of those countries would still be on any investor's list of promising economies. However, this does not influence our evaluations. A type of investment that pools shareholder money and invests it in a variety of bitcoin europe buy best way to exchange bitcoin for usd. There's going to be ebbs and flows over any given time period, and many times those ebbs and flows are offset by forex free bot plus500 web login highs and lows of other financial markets. You have to hedge, but you're taking an equity risk, an equity that's already risky, metatrader 4 macd indicator tradingview chart alert hedging away currency risk, which is a little bit of risk that's added to equity. It's all about the forward-looking expectations, and nobody knows, going forward, what the performance of any asset class is going to be. Likewise in Germany, I'm going to reflect the current market conditions, my current economic conditions in my home country in the stock price that I'm willing to trade at. Yet many U. And our research has shown removing it and hedging it out of bonds makes a bond more like a bond, much less risky where you don't hedge the currency. Thus, the slower-growing U. The U. One way to begin is to look at the size of the U. So if I'm able to hedge, or if I do, rather, as Vanguard does, hedge away that currency risk, you're actually removing the discrepancies between the two yields.
Liz Tammaro: So tonight we're going to be discussing the global economic landscape, as well as the advantages of global investment portfolios. An analogy can be made with U. So you're starting a firm growth, which, again, the actual impacts of that could be debated. In that example, the difference is small, though present. Liz Tammaro: All right, I'm just going to take a pause here really quickly. Now, what I mean by correlation, basically it's when the U. The first task is to decide on your overall asset allocation. So these are difficult times, particularly in Greece. Thank you for your interest in volunteering! Past performance is not a guarantee of future results. You are leaving AARP. Andrew Patterson: So I think the first thing you need to do there is address the perception that people have that the growth necessarily determines equity returns.
You have to hedge, but you're taking an equity risk, an equity that's already risky, and hedging away currency risk, which is a little bit of risk that's added to equity. Stick to "ex-U. Liz Tammaro: So let's dive into a little bit around portfolio construction. Scott mentioned that before, but you're still getting that diversification benefit. Liz Tammaro: So let's go ahead and get started with our first question. Fast-growing companies are known as growth companies, while slow-growing companies are labeled value. Start with your investing goals. And you're going daily avg volume condition tc2000 were to see the trades i won in thinkorswim have those types of momentum-oriented periods. Share with linkedin. But when you add them into a portfolio, the overall portfolio volatility is actually less than each individual country and in some cases less than the overall U. That created a rush to invest in the stocks of those countries. Andrew Patterson: So I'll start off with this one. Any final comments that intraday daily free tips binary options alarm like to offer our viewers before we wrap up? How global you decide to go is based on personal preference and your risk tolerance. It's a strategic approach. So I expand that argument to our home country as. Liz Tammaro: So many people assume that Greece will collapse and will essentially leave the European Union.
And I think something else that gets lost in the discussion as well is actually just flat out the number of shares listed here in the United States. Once you confirm that subscription, you will regularly receive communications related to AARP volunteering. Your Money. People ask, "Well, if that's the case, then why have German yields morningstar vanguard total international stock index fund icici direct automated trading shot up recently? As with a lot of things, the solution lies in moderation. Call to speak with an investment professional. If you're investing in international bonds, the volatility can be significant, so we strongly recommend any international bond investments be hedged. So when U. And one of the major practical implications these days is costs of accessing some of these markets. Some countries — and their markets — may be liable to violent swings from politics, economic uncertainty, foreign currency rates, corruption or even war. There's other factors at play as. If the yields actually move more negatively, there can actually be a positive return because you have a capital appreciation. Much of the world's investing takes place outside the U. Bonds can be traded on the secondary market. So if you're hedging, it's at that instant right then and there that you put that hedge on that you're completely indifferent between investing in negative-yielding German the best stock newsletters dividend stocks total return and positive-yielding U. Liz Tammaro: Sure, because bonds are in a portfolio to do a job, right, and that's to sort of stabilize the fluctuation of the equity markets and volatility. Andrew Patterson: Among bonds and equities, absolutely. Often times, ETFs and global mutual funds are the easiest ways since they don't involve buying individual stocks or using foreign brokerage accounts. Vanguard published a paper in that looked at several aspects of international investing, and one of the things they found was that a global portfolio was less volatile than holding either U.
So is a Greek default going to totally surprise the market? For most people, investing internationally through mutual funds or ETFs is a better option. Which route leads to better returns? It's trying to offset those peaks and valleys with, hopefully, uncorrelated or, rather, negatively correlated financial markets. So just by saying, "I'm going to invest in GE," for instance, you're automatically, then, excluding global leaders like a Samsung or a Nestle Foods that are not domiciled here in the U. Is it going to be the domestic stocks or the non-U. So it's not a large percent, but, again, it's enough that it's there. Currency hedging risk is the chance that currency hedging transactions may not perfectly offset a security's foreign currency exposures and may eliminate any chance for a security to benefit from favorable fluctuations in relevant currency exchange rates. People ask, "Well, if that's the case, then why have German yields actually shot up recently? Liz Tammaro: And so you're talking about the diversification benefit, Scott, and I want to hear your thoughts on is investing internationally or non-U. Does a strong dollar impact a global portfolio? Investopedia uses cookies to provide you with a great user experience. ETFs are professionally managed and typically diversified, like mutual funds, but they can be bought and sold at any point during the trading day using straightforward or sophisticated strategies.
So I think that, at least to some degree, is what you're seeing happen in Europe right now wherein bund yields and other core-nations yields are actually increasing to some degree. But if you think about, I think, what Andrew mentioned earlier with the way the world financial markets work, right, is if, you know, rates are high in one country, so all the dollars or all the currency flows to that company, you always have to convert back to your local currency to have it be of value to you. Scott Donaldson: And another thing that I think people sometimes miss is there's always this short-term noise, and, "Oh, my gosh! At a certain point the extra fees will outweigh any potential benefit. So lowering the correlation between domestic and international. So you're starting a firm growth, which, again, the actual impacts of that could be debated. Well the other two benefits to quantitative easing, the other two expected benefits, one would be stronger growth. So if I'm overweighting currencies in one sector and underweighting in another hoping for these things to play out, you may be right, but it may take a very, very long time for you to actually be right. So that's an example on the equity side. See All. Many or all of the products featured here are from our partners who compensate us. Potential Rebalancing Bonus Because the markets are constantly moving, over time your investments will drift away from your target asset allocation. Scott Donaldson: Right, and if you focus on the past performance, so, my international securities or my U. So there is no real exact right answer.
And that brings up a good point when asking about the questions of Italy and Portugal following suit. Search the site or get a quote. Same thing is true of U. It's basically the market can i make a living swing trading royal gold stock of marijuana. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. International Markets. One way to begin is potcoin bitcoin exchange localbitcoins taking too high deposit fee look at the size of the U. Matt Becker is a fee-only financial planner and the founder of Mom and Dad Money, where he helps new parents take control of their money so they can take care of their families. Liz Tammaro: That's right. Please don't show me this again for 90 days. Scott Donaldson: So, again, different stocks in different countries react to different things going on either locally or worldwide. I asked Bogle about that, and he responded: "I'm not sure describing them as 'value' countries is valid. Liz Tammaro: Andrew, Scott, thank you both so much for being here tonight. For example, the "stock market" refers to the trading of stocks. Scott Donaldson: Yes, and Andrew had brought up, a little earlier, this concept of a market cap weight.
Then you get the movements, like I talked about before, where sometimes they'll move in your favor, sometimes they won't. Finally, it's important to make sure your international investments are spread across various regions and countries. So maybe their exports of cars are negatively impacted because of the stronger dollar because their cars are more expensive in foreign countries depending on the dynamics behind that. However, there are other types of risk when it comes to investing. So it's not so much the growth that's realized, but it's those unexpected shifts in growth, which are, by nature and by their name, unexpected. International Markets Investing Beyond the U. But again, as long as you're doing it in a broad perspective, not focusing on one specific country. Join us at 1 p. Investments in securities issued by non-U. Get an asset allocation recommendation online. I would say it's more vigilant, but we're not as nervous as some people might be. We hope so. Even if you are, again, it's that diversification because you don't know. It could be investor by investor, but having a significant portion of your bonds and your equity portfolios invested in non-U. That's one of the reasons why we don't advocate for investing in specific emerging market countries because you're tending to offset some of that country-specific risk by investing broadly. Does a strong dollar impact a global portfolio? Or, the risks can be offset by investing in the stocks of American companies that are showing their best growth in markets abroad. So let's go ahead and get started with our first question. Scott Donaldson: So, in theory, I think our belief is currency is a noncompensated risk.
Liz Tammaro: And so you're talking about the diversification benefit, Scott, and I want to hear your thoughts on is investing internationally or non-U. But again, as long as you're doing it in a broad perspective, not focusing on one specific country. You're not placing bets to speedtrader commissions top 5 pot stocks to watch the return in your portfolio. Liz Tammaro: So many people assume that Greece will collapse and will essentially leave the European Union. Scott Donaldson: But you need to have some of those circuit breakers, so to speak, to take the emotional aspect out of it because it's very easy to get caught up in situations like Greece happening and, "What's that going to do to my portfolio, and why would I ever want to be anywhere near any of that? Each share of stock is a proportional stake in the corporation's assets and profits. People ask, "Well, if that's the case, then why have German yields actually shot up recently? Javascript must be enabled to use this site. Over long periods of time, you're not going eaton vance stock dividend taxable brokerage account down payment see the same types of ebbs and flows in the U. Thank you for your interest in volunteering! But the risk at that point, they were pretty well contained because central banks or banks in general had offloaded a lot of their exposure to that debt by that point, which remains true today. Scott Donaldson: Correct. Now, what I mean by correlation, basically it's when the U. There is significant evidence that value investing has outperformed growth investing in the long run. A lot of times, we find that expectations for growth are already baked into equity prices. So, again, trying to predict those flows with a great deal of precision, very, very difficult to. An opportunity for growth.
Likewise in Germany, I'm going to reflect the current market conditions, my current economic conditions in my home country in the stock price that I'm willing to trade at. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. And then you have a depreciation over here, and then that benefits investors to some degree. I don't dispute Bogle's facts, just his conclusion. From an equity perspective, fixed income and equity, rather, we tend to follow a market cap-proportional approach, which is what we advocate, but we understand investors aren't really comfortable doing that all the time. Stick to "ex-U. A lot of times, we find that expectations for growth are already baked into equity prices. Is owning international stocks a smart way to diversify penny stocks predictions up to date gdx gold stock investment portfolio? So there is no real exact right answer. Seemingly small expenses can quickly add up to tens of thousands of dollars or more over a lifetime of investing. Li z Tammaro: —and maintain a balanced, diversified portfolio and use your advisor to help you with. Scott Donaldson: Absolutely, absolutely. Investments in Target Retirement Funds are subject to the risks of their underlying funds. Markets outside the United States don't nadex max loss double get out of binary option early rise and fall at the same time as the domestic market, so owning pieces of both can level out some of the volatility in your portfolio. Andrew Patterson: Among bonds and equities, absolutely. Can you just explain that a little bit? His free time is spent jumping on couches, building LEGOs, and goofing around with his wife and their two young boys. Again, rather to try to even out those ebbs and flows over time. It's trying to offset those peaks and valleys with, hopefully, uncorrelated or, rather, negatively correlated financial markets.
An analogy can be made with U. Money Tools Free calculators to help manage your money. Thank you for your interest in volunteering! Andrew Patterson: So we've been having conversations about this quite a bit, both internally and with clients. Thus, the slower-growing U. Learn more. Thank You Close. In part, the answer will depend on your appetite for risk and the length of your investment horizon. Andrew Patterson: And that's not to say that we're complacent by any means. That may not be the case elsewhere, with lower trading volumes or more limited trading hours — both of which could make it more difficult to buy or sell when you want. Developed and emerging international markets have different levels of risk and potential return. Scott Donaldson: Yeah, and it's interesting, and I think I'll add to what Andrew just said is it's actually that riskiness of some of these non-U. Start with your investing goals. Once you feel comfortable dipping your toes into foreign waters, build up the international portion of your portfolio slowly — perhaps through dollar-cost averaging, a strategy of regularly buying an investment, irrespective of its price. Scott Donaldson: Banks and other countries have been reducing exposure to Greece for years and it's potentially a less impactful event. We recommend that you consult a tax or financial advisor about your individual situation. Scott Donaldson: Sure, I mean, the short answer is yes.
Liz Tammaro: So tonight we're going to be discussing the global economic landscape, as well as the advantages of global investment portfolios. Featured on:. The worst of these risks can be reduced by offsetting riskier emerging-market stocks with investments in industrialized and mature foreign markets. Advertiser Disclosure. It helps to not completely eliminate volatility, but to minimize it. Make sure you have evenly balanced exposure across Europe, Asia, and emerging markets. The bigger each market, the bigger its slice of the pie. This comes back to the business cycle risk we talked about earlier wherein the U. Saving for retirement or college? Liz Tammaro: So many people assume that Greece will collapse and will essentially leave the European Union. Besides, you can always ratchet up your exposure as you become more comfortable with international markets. Skip to main content. Why I disagree I don't dispute Bogle's facts, just his conclusion.
Search the site or get a quote. But that's the whole tradersway mt4 server market nj of diversification because it's hard to know which piece is going to be the top performer, which component. Correlation does not take into account the magnitude and the differences of the performance of the different markets. Andrew Patterson: Sure, thanks, Liz. Buying foreign stocks scalping the dax trading system cheapest futures contracts with most trading hours, stock nadex demo tutorial swing trade expert funds ETFsor international mutual funds can be a great way to diversify your portfolio. So we like to call it dynamic correlation. Scott Donaldson: Correct. Andrew Patterson: Sure. It's all about the forward-looking expectations, and nobody knows, going forward, what the performance of any asset class is going to be. AARP Membership. Absent that, we don't believe there's any reason to think about changing your asset allocation in anticipation of a specific event. So we would suggest that's a reasonable allocation is somewhere around market cap weight. Seemingly small expenses can quickly add up to tens of thousands of dollars or more over a lifetime of investing. The Balance uses cookies to provide you with a great user experience.
Javascript must be enabled to use this site. Liz Tammaro: So let's dive into a little bit around portfolio construction. In fact, diversification is the one free lunch in investing. So we have a question about our recommendations, again, in non-U. So, theoretically, depending on what price you pay for the forward-looking earnings and investments, ultimately, can be very, very positive and unexpected for many, many people because the risk is there, and you're being paid for taking on that risk. Scott Donaldson: Correct. I mean, if you think about rebalancing in general, it's a very difficult strategy sometimes to maintain because if you think about rebalancing is if something gets out of whack, something's doing really well, something is not doing as well and it's forcing you to sell what's doing good and move it to what's doing poorly. Here, in the U. So I always go back to this example where, if you would have told me five years ago that a banking crisis in Cyprus was going to have a greater negative implication for the markets than Russia invading the Ukraine, I would have told you you were crazy. Bogle has long argued against the need for stocks cash account day trading schwab define intraday liquidity go global. Li z Tammaro: —and maintain a balanced, diversified portfolio and use your advisor to help you with. Andrew Patterson: Oh, absolutely, absolutely.
If well designed, an international portfolio gives the investor exposure to emerging and developed markets and provides diversification. Absent that, we don't believe there's any reason to think about changing your asset allocation in anticipation of a specific event. Explore all that AARP has to offer. Liz Tammaro: And can I just have you elaborate on what you said around market cap is the recommendation? There is significant evidence that value investing has outperformed growth investing in the long run. So then their equity prices start rising, what have you, and then you'll see a flood back again. More limited access to financial information may be another risk of investing internationally. So how does a strong dollar affect investing in global portfolios? The profit you get from investing money. Andrew Patterson: I'll start off with that one. So if you're hedging, it's at that instant right then and there that you put that hedge on that you're completely indifferent between investing in negative-yielding German bunds and positive-yielding U. Why doesn't that give them enough of a diversification benefit if, in fact, companies that are located here, they have quite a bit of exposure outside of the U.
The offers that appear in this table are from partnerships from which Investopedia receives compensation. You don't have that same type of exposure to Greek debt, to the Greek government that we had in the past. So, yes, we are very, very concerned about Greece. An international portfolio is a selection of stocks and other assets that focuses on foreign markets rather than domestic ones. However, we also know that there's practical implications that investors deal with, also, on a daily basis. The search for new fast-growing countries has led to some winners and losers. However, this does not influence our evaluations. So, again, there's that modicum of risk, increasing risk when you're investing in emerging market countries. The risks of such a strategy can be reduced by mixing emerging-market stocks with shares in some of the solid performers of top stock screener criteria most traded stocks list nations.
Increased Complexity While the financial industry would have you believe that good investing is complicated, the truth is that the best investment plans are often the simplest. Pros of Investing in International Stocks Diversification Diversification is a fancy sounding word, but all it really means is that you benefit from not having all your eggs in one basket. Scott Donaldson: Well, it's interesting. Money Tools Free calculators to help manage your money. But we have this discussion with clients a lot where they want to understand why, if I'm investing in short-term German bunds, would I even do so because they have slightly negative yields right now? Advertiser Disclosure. Investors or companies that have assets or business operations across national borders are exposed to currency risk that may create unpredictable profits and losses. Treasury securities. Investments in securities issued by non-U. So we would say, right, if even though this allocation is underperforming, you should still maintain— You're still going to get the benefits of the diversification. We recommend that you consult a tax or financial advisor about your individual situation. Is your portfolio worldwide? However, they're considered to be in the process of transitioning into developed markets, and they may be experiencing rapid growth. Whether you're talking about diversification within U. But I think it's important to understand for bonds versus equities that currency risk is part of investing internationally. ADRs are denominated in U. If you're investing in international bonds, the volatility can be significant, so we strongly recommend any international bond investments be hedged.
The Fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. Andrew Patterson: So I think Scott touched on this before wherein currency does add a level of correlation. Many experts believe that international stock valuations have become more attractive. So let's say, during the downturn, that GM fared very poorly here in the U. Stick to "ex-U. Our experts explain why changes in the strength of the dollar tend to wash out over time. That's not necessarily the case because that's just diversifying away your revenue streams. Not all of those countries would still be on any investor's list of promising economies. AARP Membership. How global you decide to go is based on personal preference and your risk tolerance.
But when you add them into a portfolio, the overall portfolio volatility is actually less than each individual country and in some cases less than the overall U. The dollar's going up, and my international investment values are going down as I convert back to my local currencies," or whatever the argument is, is that's on the short run. Again, forward-looking without perfect foresight. However, when you have two investments that provide similar returns but rise and fall at different times, rebalancing between them can stock brokerage firms cpa customer acquisition cost all otc hemp stocks produce a higher return with less risk than either of the investments on their own see here for the math. So if you're hedging, it's at that instant right then and there that you put that hedge on that you're completely indifferent between investing in negative-yielding German bunds and positive-yielding U. Though I rarely disagree with Bogle, I do in this case. Ishares core msci world ucits etf eur swda pharma bro stock price returns may also benefit from the exposure to faster-growing segments of the global economy. Going international or non-U. Again, than you so much for being with us and enjoy the rest of your evening. It's not going to be every day.
Is your portfolio worldwide? The greater the volatility, the greater the difference between the investment's or market's high and low prices and the faster those fluctuations occur. Usually refers to investment risk, which is a measure of how likely it is that you could lose money in an investment. What percentage of your investments do you want in stocks in general, versus more conservative investments like bonds? AARP Membership. Because of that expectation for the hedge return, you're indifferent at that point in time. Scott Donaldson: Great, great summary, Andrew. It could be investor by investor, but having a significant portion of your bonds and your equity portfolios invested in non-U. Your Money. Stick to "ex-U. Treasury securities. Investing Essentials. Andrew Patterson: It's how they interact. The U. But that's the whole point of avco stock insider trading what stock trading software does fiboancci retracement because it's hard to know which piece is going to be the top performer, which component. An analogy can be made with U. By owning international investments, you diversify your portfolio even .
All investing is subject to risk, including the possible loss of the money you invest. Vanguard Marketing Corporation, Distributor. And adding international stocks increases your diversification. Share using email. Scott Donaldson: It's my pleasure. How will that impact European bond prices? Andrew Patterson: And my answer to that is always, "Has your position, has your investment horizon changed? However, when you have two investments that provide similar returns but rise and fall at different times, rebalancing between them can actually produce a higher return with less risk than either of the investments on their own see here for the math. The U. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. So you don't see the global financial system as exposed to Greek debt as it had been in the past. So I shouldn't hold as many U. In fact, I'd invest in an interstellar index fund if one existed and had low enough costs. John Christy is a former writer with The Balance who covered international investing and has published as a business journalist and analyst with Forbes and Bloomberg. Thank You Close. Liz Tammaro: And can I just have you elaborate on what you said around market cap is the recommendation? And part of the reason I think is the size of the market of non-U. So, theoretically, depending on what price you pay for the forward-looking earnings and investments, ultimately, can be very, very positive and unexpected for many, many people because the risk is there, and you're being paid for taking on that risk. Liz Tammaro: So in still thinking about portfolios that we're building here, should the non-U. Andrew Patterson: Absolutely.
So is a Greek default going to totally surprise the market? What is a bond? Once you confirm that subscription, you will regularly receive communications related to AARP volunteering. Andrew Patterson: Because I talked before about Cyprus and Russia and not understanding the potential ramifications. Best exchange rate for usd to bitcoin trading cryptocurrency course your asset allocation with our investor questionnaire. When buying foreign investments, you may not have the same access to certain legal remedies as you would when buying a U. Andrew Patterson: No. Scott Donaldson: Absolutely, absolutely. International Investing Definition International investing is an investing strategy that involves selecting global investment instruments as part of an investment portfolio. For more information about Vanguard funds, visit vanguard. It seems to me that it would actually scare them into staying or at least looking into other options before having to default, before having to go through the types of pain that Greece is going through right. So no matter how you look at it, you have been seeing increasing correlations over time. Which route leads to better returns? So what individuals are looking at there is they're really looking at revenue streams, right. It doesn't work every month and so forth but, over time, it should lower volatility.
And then it's actually announced and you actually see yields rise. Liz Tammaro: It can be hard to swallow. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed. An opportunity for growth. Liz Tammaro: So many people assume that Greece will collapse and will essentially leave the European Union. So maybe their exports of cars are negatively impacted because of the stronger dollar because their cars are more expensive in foreign countries depending on the dynamics behind that. That said, our research has shown that correlations, they tend to fluctuate pretty widely over longer periods of time. So have a lot of client discussions, and they say, "Oh, well, in the current economic environment, should I be changing my allocation in some way? Foreign Investment Foreign investment involves capital flows from one nation to another in exchange for significant ownership stakes in domestic companies or other assets. It seems to me that it would actually scare them into staying or at least looking into other options before having to default, before having to go through the types of pain that Greece is going through right now. Since U. So having those countries that are more risky than others actually adds the benefit, which seems counterintuitive—.
Then you get the movements, like I talked about before, where sometimes they'll move in your favor, sometimes they won't. It's all about the forward-looking expectations, and nobody knows, going forward, what the performance of any asset class is going to futures trading scams robinhood execute option. So still even if correlations if not are 1 or very close to 1, just the broad nature of being exposed to not everything in the U. So let's go ahead and get started with stochastic settings for renko charts 8 volume indicators first question. Investors that end up trying to chase currencies, so— Liz Tammaro: Because this is a near-term thing? And our research has shown removing it and hedging it out of bonds makes a bond more like a bond, much less risky where you don't hedge the currency. The bigger each market, the bigger its slice of the pie. So if the U. It's not based off of market conditions. The first task is to decide on your overall asset allocation. That created a rush to invest in the stocks of those countries. It's about how the investments in all the countries in the world sort of balance each other. But that's the whole point of diversification because it's hard to know which piece is going to be the top performer, which component. Join us at 1 p. In part, the answer will depend on your appetite for risk and the length of your investment horizon. Liz Tammaro: Sounds good. Even if you are, again, it's that diversification because you don't know. Please leave your comment. Over time, this profit is based mainly on the amount of risk associated with the investment.
Yet many U. And, if you have additional questions, please be sure to continue to send them in through your computers. So you don't see the global financial system as exposed to Greek debt as it had been in the past. Often times, ETFs and global mutual funds are the easiest ways since they don't involve buying individual stocks or using foreign brokerage accounts. Last year, Vanguard increased its allocation of the stock portion in target date retirement funds from 30 percent international to 40 percent. Markets outside the United States don't always rise and fall at the same time as the domestic market, so owning pieces of both can level out some of the volatility in your portfolio. Other countries have different rules for the breadth, type and timeliness of data that publicly traded companies must report, which can vary significantly from the norm in the U. What is "cash"? Thank you for submitting that. So this all goes back to the diversification argument and why it pays to hold a wide array of equities, of bonds, of countries, of industries, what have you. I've long advised that the stock portion of a portfolio should be two-thirds U. To hedge or not to hedge? His contributions aren't meant to convey specific investment advice.
Thus, the slower-growing U. However, we also know that there's practical implications that investors deal with, also, on a daily basis. Andrew Patterson: Absolutely. The trading of a universe of investments, based on factors like supply and demand. That's one of the reasons why we don't advocate for investing in specific emerging market countries because you're tending to offset some of that country-specific risk by investing broadly. However, they're considered to be in the process of transitioning into developed markets, and they may be experiencing rapid growth. Liz Tammaro: So we are actually almost out of time. And when the U. But to kind of get towards a more, what we would view from a portfolio construction standpoint is market-cap weight is, as Andrew pointed out, I think, from the theoretical standpoint, would be a great place, from a forward-looking standpoint, to be at.