April 23, 2015
Reminder about global diversification in your investment portfolio
I was recently at a Dimensional Funds conference and the topic of global investing came up. US equity markets have outperformed non-US equity markets over the past few years. This may give clients concern about investing outside of US markets and the global portfolios we've recommended for you.
We wanted to remind you that just because US equity markets have outperformed recently doesn't guarantee they'll continue to do so. Below is a link to a chart comparing the performance of US equity markets to non-US Developed equity markets by year since 1990.
Page 1 of the chart does a nice job showing the randomness of returns during this time period for each country's equity markets. But I think Page 2 does an even better job conveying this point by isolating the US market return (i.e., the bright yellow box) for each year. As you can see, the US equity markets bounce around from high- to low-performance relative to non-US equity markets each year in no reliably predictable way.
While we're not making any predictions for 2015 and beyond, I think these charts nicely illustrate the importance of being diversified across both US and non-US equity markets. (In fact, DFA's US Core Equity I fund is up 3.97% year-to-date while DFA's International Core Equity Portfolio fund is up 8.66% year-to-date.) As this evidence suggests, we continue to recommend having global portfolios for you to be diversified and capture investment returns from all segments of our global economy.
If you have any questions about your investment planning or overall financial planning, please let us know. Thank you!
Please click on the link below for the Chart mentioned above.
“They are there when I need them”
“Jarod is very sharp, detailed oriented, committed, and responsive”
“Their thoroughness sets them apart”
“Proactive, trust them, responsive … well-versed on tax laws and issues”