What Does a Global Portfolio Look Like?
Most seasoned investors understand the benefits of diversification. Few think it wise to hold only a small number of equities or invest heavily in just one sector. Intuitively, diversification makes sense, and finance theory agrees: Diversifying is an essential part of risk management and can be vital to long-term investment success.
Yet most American investors aren’t nearly as diversified as they think. American investors tend to focus solely on US stocks. After all, America is home to the biggest economy and stock market in the world.
Even so, America represents around two-thirds the value of the world’s developed stock markets and about 22% of the global economy.* A portfolio with only US stocks misses out on opportunities in the rest of the world.
Exhibit 1: MSCI World Country Weights**
*Source: FactSet, International Monetary Fund, as of 12/31/2024. 2024 US and World GDP, Current Prices, measured in US dollars. **Source: FactSet, as of 12/31/2024. Values may not sum up to 100% due to rounding. The MSCI World Index measures the performance of selected stocks in 23 developed countries as of 12/31/2024.***Europe and Middle East includes 15 developed market countries: Australia, Belgium, Denmark, Finland, France, Germany, Ireland, Israel, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and Switzerland.****Pacific includes Australia, Hong Kong, New Zealand and Singapore.
Discover the Potential Benefits of Becoming a Global Investor
- More Opportunities Abroad: Global investing can offer performance-enhancing opportunities missed by single-country investors (even when the country is as large as America).
- A Smoother Ride: Over time, increased foreign exposure may actually reduce volatility.
- Currency Diversification: Global investing can help insulate a portfolio from the strength or weakness of any single currency.
Although global investing involves some additional challenges, working with a money manager like Fisher Investments that specializes in globally diversified portfolios can make it easier than you might think.
More Opportunities Abroad
Looking Beyond the US
American investors—from beginners to professionals—tend to focus almost exclusively on US stocks. The US has the world’s biggest, most dynamic and diverse economy, but that doesn’t mean America’s stock market will always be a top performer. Leadership in capital markets changes continuously.
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