Staying Home: International Diversification

Ted

FYI: A UNIQUE EVENT occurred earlier this month: A group who call themselves the Bogleheads held an investment conference in the Philadelphia area, near the headquarters of Vanguard Group. Since its inception in 2000, this annual gathering has brought together fans of Vanguard’s founder Jack Bogle, who died earlier this year.

Bogle was beloved by his fans for his authenticity and iconoclastic views. He was so self-assured, in fact, that—after he retired from Vanguard—he didn’t hesitate to share his opinions, even when he was in the minority and even when he disagreed with Vanguard’s official position.

Among the points on which Bogle disagreed with Vanguard was the question of international diversification. For decades, until the end of his life, Bogle was consistent in his view that investors need not—and probably should not—diversify their portfolios outside the U.S. Bogle said that his own portfolio was 100% domestic and he recommended that others do the same.
Regards,
Ted
https://humbledollar.com/2019/10/staying-home/

Tarwheel

I agree with the author on this issue. I hold 15-20% of my portfolio in foreign stocks funds for diversification purposes, but see no need for higher percentages. Foreign stocks have been a drag on my portfolio for the past 10 years, but I also remember a time when they outperformed for many years.

Old_Skeet

The foreign dividend payers are a good place to look for yield. My sleeve of global dividend paying equity mutual funds has a higher yield than my sleeve of domestic dividend paying equity mutual funds. With this, and most likely, I'll be putting some money to work in my global dividend paying equity funds come December after my equity mutual funds have made their yearend capital gains distributions

My current investing goal is to not only to grow my principal; but, my portfolio's yield as well. With this, as mutual funds found in the growth area of my portfolio make thier yearend capital gain distributions I plan to buy (with these distributions) in the growth and income area of portfolio thus increasing my portfolio's yield while at the same time allowing for some continued capital appreciation. Over the past rolling twelve months I've increased my portfolio's income stream by 13% mostly due to it's reconfguration which I began late last fall. It will be interesting to see how 2018 yearend statement compares to 2019's. I'm thinking both income generation and valuation will be up over last years closing statement.

I'm also thinking that my asset allocation will continue to bubble somewhere around 20% cash, 40% income and 40% equity. Within the 40% equity allocation I plan to grow my dividend payers and slightly reduce my capital appreciation (growth) funds by redirecting future capital gain distributions into the dividend payers over putting them back into my growth funds.