Stock asset allocation for non-US investors

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.

Stock asset allocation for non-US investors looks at how a non-US investor might decide on their allocation to stocks.

When deciding on 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 the Boglehead principles is to 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.

• Owning the whole worldwide stock market seems to best implement this mantra. It would mean to own large cap, mid cap and small cap stocks of the developed and emerging markets, covering about 98% of the worldwide stock market. Unfortunately, this might require a more complex and more expensive portfolio of multiple funds. Hence sometimes a simpler portfolio is warranted:
  • focus on large cap and mid cap stocks of the developed markets only: covers about 75% of the worldwide stock market^{[citation needed]}
  • focus on large cap and mid cap stocks of the developed and emerging markets: covers about 85%-90% of the worldwide stock market and might be achieved with one or two funds.^{[citation needed]}

• Home bias: overweight your country or region

• See: Home country bias from finiki, and Equity home bias puzzle from Wikipedia.

• Overweighting the US market: Many US based Bogleheads overweight the US stock market. This might also be a strategy for the non-US investors^{[citation needed]}

Variations on Boglehead investing

See also: Variations on Bogleheads® investing

Next to the mainstream Boglehead stock allocation there are a few often practiced variations on Bogleheads investing that are as valid for non-US investors as they are for US investors.

• Adding and overweighting 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 overweighting some of the slices.

External links

Non-US domiciles - general Outline and FAQs Outline of non-US domiciles • Non-US frequently asked questions United States excluded Entry pages Getting started for non-US investors • Investing start-up kit for non-US investors • Investment philosophy for non-US investors • My portfolio: seeking advice United States excluded Portfolio construction Bond basics for non-US investors • Building a non-US Boglehead portfolio • Complex non-US portfolios • Domicile • Index funds and ETFs outside of the US • Non-US Robo-advisors‎‎ • Real estate investment trusts for non-US investors • Simple non-US portfolios • Stock asset allocation for non-US investors United States excluded Portfolio management and taxation Comparison of accumulating ETFs and distributing ETFs • Investing from outside of the US • Investment trusts • Non-US investors and ETF currencies • Non-US investor's guide to navigating US tax traps • Nonresident alien's ETF domicile decision table • Nonresident alien investors and Ireland domiciled ETFs • Nonresident alien taxation

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