Asset allocation by geography. How much does it matter?
Obviously keeping an anchor to the wind in terms of home currency is important. However, I come across critiques of portfolio construction in terms of how under or over weight they are in comparison to the MSCI World Index.
Surely the most important aspect of portfolio construction is owning good companies/funds regardless of geography?
If one has a diversified portfolio across sectors, market cap and geography why consider, for example, rebalancing to 60% US stocks just because that reflects total world market cap?
Obviously keeping an anchor to the wind in terms of home currency is important. However, I come across critiques of portfolio construction in terms of how under or over weight they are in comparison to the MSCI World Index.
Surely the most important aspect of portfolio construction is owning good companies/funds regardless of geography?
If one has a diversified portfolio across sectors, market cap and geography why consider, for example, rebalancing to 60% US stocks just because that reflects total world market cap?