Despite the worldwide market turmoil of recent years, U.S. investors have been boosting their allocation to overseas funds, but need more education from advisors to battle a serious overweight in US stocks, according to a new white paper.
“Eyes Wide Open: Responses to the Increased Complexity of Global Investing” from Thornburg Investment Management, notes that US investors boosted their allocation to global and international funds in the years between 2007 and 2011, but argues they should do more. Sending $150 million in new inflow to overseas funds was a canny move, as those funds managed to shine in spite of the Euro crisis. Still, Americans tend to have the same “home bias” shared by investors around the world. The average American investor’s mutual fund portfolio is 73% allocated to US stocks. But the US only accounts for 22% of the world’s GDP. Even accounting for the country’s structural advantages, including rule of law, stable and peaceful political system and so on, that’s still an overweight of three times the norm relative to GDP, according to the paper’s author, portfolio manager Connor Wilson.
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