Three out of Five Investors Intentionally Have an International Allocation

November’s Asset Allocation Survey special question asked AAII members if they intentionally allocated to international investments. Three out of five respondents (60%) say that they do intentionally allocate to international markets. Reasoning in this group varies but a majority cite diversification, potential growth in emerging markets and a greater number of investment opportunities as their rationale. Conversely, 31% of respondents state that they do not purposely allocate to international investments. Some within this group say while they do hold some international investments, their allocation to them is not intentional. Others within this group view international investments as adding too much complexity given changing exchange rates and unfamiliarity with foreign economies and companies. Additionally, 9% of respondents state that they occasionally invest in international markets, with some saying they do so to take advantage of bargain opportunities when the U.S. dollar is perceived as being overvalued.
Here is a sampling of the responses:

• “I do not as I am of retirement age and do not want to be subject to currency swings or political events in foreign countries.”
• “I do because I believe that there are opportunities in the future. Regardless of the political rhetoric, we live in a global community and economy.”
• “Only a small amount. American equity already has a lot of foreign exposure.”
• “I do not. Since I am more aware of, and educated on, domestic investments, I feel more comfortable staying ‘home.’”
• “Many companies I invest in have major positions internationally. I avoid China because accounting standards are not up to ours; however, I do have a small position in an international dividend stock ETF.”

Want to weigh in? Take the survey yourself and see results online at www.aaii.com/assetallocationsurvey.