October’s Asset Allocation Survey special question asked AAII members why they are or are not allocating to international markets. Nearly a third of all respondents (32%) said they are not allocating to international markets. Many of these individual investors thought U.S. stocks offer better investment opportunities; others thought foreign markets were too risky or said they lacked enough information to invest overseas. About 24% of respondents said they were allocating to international markets for reasons of diversification and/or to take advantage of the global economy. Slightly more than 12% of respondents thought international stocks offered good opportunities for returns. (Some members listed both diversification and the possibility of higher returns as reasons.) About 7% said they had exposure through large U.S. companies or through their funds.
Several respondents volunteered their allocation to foreign markets. Most commonly, these individual investors allocated between 5% and 20% of their portfolios to foreign securities.
Here is a sampling of the responses:
- “I diversify because it is a global economy.”
- “I am allocating to international markets because that is where the growth will be.”
- “I do not allocate to international markets due to political instability, problems with their economy and civil unrest.”
- “I get exposure to international markets through U.S. companies.”
- “There is not as much good information available for foreign markets and stocks.”