What percentage of an individual investor’s portfolio should be devoted to international investments?
Based on professionals’ recommendations at Vanguard, Fidelity, T. Rowe Price and other fund families as reflected in their target retirement date funds, they recommend that the international exposure should be between 20 percent and 30 percent of the stock portion of the portfolio. For new retirees, the stock portion may be 50 percent, so the international exposure may be 10 percent to 15 percent of the total portfolio. For someone younger than 40, they recommend about 90 percent stocks, so the international exposure may be 22.5 percent. Furthermore, they recommend international stocks for all investors from recent college graduates to grandmothers.
- Professor’s Profile:
William Reichenstein, CFA, Ph.D.
- Pat and Thomas R. Powers Chair in Investment Management