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Author: cliff666 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: Asset Allocation in International Date: 8/18/2005 11:16 AM
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I see no reason to be in an international fund. The fees and expenses are higher, and performance over time isn't as good as good domestic funds.

This is an odd comment, to me. There are several indexes which some funds try to emulate. Vanguard's Total International Index Fund is a mix of four offshore indexes, for one example.

The way I understand it, international stocks tend to have a higher vairance than US stocks (on average - I ddon't think Daimler Benz has a lot of variance.), but they offer somewhat higher return, again, on average. The marketplace rewards risk, no? So the studies I have seen suggest, "What if you cobble together a mixture of US and International stocks?" It turns out that a mixture of 60-70% domestic and 30-40% international stocks gives a higher return and lower variabnility than pure US. The curve is describde as looking like a fish hook.

This is one reason I have kept my American Funds. The New Perspective Fund, in particular has a genorous dollop of international. For a sportier mindset, the Small Cap World has more international. The Capital World Growth and Income Fund is another fave. The big problem with American Funds is the front end load. But I bought years ago, and so there is no penalty to keeping them. (The load is reduced as you have more and nire invested. At $1 million, there is no load at all.)

So, I disagree that the performance over time isn't as good as domestic funds. A mixture is best.

cliff
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