Equity mix - definition of international equities

[tolkarovers]

Hi everyone,
I have a question about how to clasify equities when balancing a portfolio.

I'm Irish and working in Ireland with the majority of my holdings in Irish or UK companies.

I'm looking to diversify into things like small cap value stocks and it looks like the best products are on US markets.

Would I have to classify US stocks as International equities in my portfolio or can I just make a decision to class Irish, UK and Us as domestic and everything else as International??

I'm looking to build up stocks in the following classes and the US looks like it offers the most options:

Domestic Lrg Cap Growth​

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Domestic Lrg Cap Val​

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International Lrg Cap Growth​

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Domestic Sml Cap Growth​

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Domestic Sml Cap Val​

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International Lrg Cap Val​

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International Sml Cap Growth​

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International Sml Cap Val​

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bonds​

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Emerging Markets​

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Thanks

 

[tiger]

Nobody is going to force you to categorise your portfolio. Terms can be a bit subjective in any case, might find more info here. There are probably more funds available in the US with the labels you've listed above, doesn't mean they are the best options.

 

[Allen]

You are balancing your portfolio to spread the risk. If the American economy crashes then the Irish economy probably will as well. The US equities could therefore be considered to be in the same risk category as your Irish equities i.e. if your US equities tumble in value, your Irish ones are likely to do the same.

 

[darag]

The problem with a lot of the information out there on portfolio management is that it is aimed at the US citizen. You need to be careful not to blindly transpose the advice. For example, many advise about 30% of your equity exposure should be foreign but that's within the context of the US where over 55% of the world stock cap is "domestic". However it would be very risky for an Irish person to have 70% of their equity exposure in the ISEQ given that the Irish stock market makes up 1% or less of the world market. My take on it (and I've argued with SPC100 on this in the past) is that you should simply take a global view and try to evenly spread your investments around the world if you can. On this basis your exposure to the ISEQ should be tiny. In fact none of my future savings will go on the Irish stock market - I already depend on a substantial portion of my income on the performance of a large Irish company which is very exposed to the Irish economy. As the former Enron employees learned the hard way - putting your income and wealth (savings) into a single basket has potential for absolute disaster.