Is it time to make the PP and GB less U.S.-centric?

[Kevin K.]

It seems to me that Trump's tariff tantrum has exacerbated and accelerated some already-extant macro trends that taken as a whole make it highly likely that the U.S. is no longer going to be dictating the terms of world trade and cannot count on being the sole reserve currency of choice.

While Harry Browne rightly never trusted any government the PP is still built around the full faith and credit of the U.S. government being ironclad and a U.S. Stock index fund being all the equity exposure anyone needs.

I'm wondering if a more defensive approach is worth considering. For example, replacing VTI with a total world stock fund like VT (adjusts for global market percentages - currently 65% U.S., 35% International). The bond side is less obvious to me: BNDW is dollar-hedged which somewhat defeats the purpose, IGOV is int'l treasuries only, has tiny AUM and seems like a pure currency play that could easily backfire. Interestingly the Global Market Portfolio that Tyler has on Portfolio Charts could be implemented almost exactly using 45% bonds (40% VGIT, 60% IGOV), 50% VT for equities and 5% in gold.

Any thoughts appreciated.

[dualstow]

I know some people prefer VT (Vanguard total world) for stocks in their pp. I have some international indies in my vp, but no plans to change.

Whenever someone is reacting to politics or world events, or even the interest rate, I feel rather reactionary. I feel like that cartoon production boss who refused to adapt from black & white to color, and lost all of his best artists as a result. But, Trump is not going to be in charge forever, unlike my pp.

[Hal]

Just out of curiosity, back tested US PP against an international version. (VASIX/GLD)
Note that Gold/Shares/Cash&Bonds are 17%/17%/66% in both versions so allocations match (still within PP rebalance bands)

Seems similar for last 10 years using free version of Portfolio Visualiser.

[ochotona]

IGOV ETF has AUM = $830 Million

That's not little. It's not like IEF AUM = $34,715 million, but almost a billion dollars is certainly large enough to be a well-functioning ETF.

$20 million is the extinction point. I generally don't buy anything under $100 million.

[Kevin K.]

IGOV ETF has AUM = $830 Million

That's not little. It's not like IEF AUM = $34,715 million, but almost a billion dollars is certainly large enough to be a well-functioning ETF.

$20 million is the extinction point. I generally don't buy anything under $100 million.

Thanks for that clarification ochotona!

I guess the question for someone like me who unlike yourself is not an active trader is whether, given that there's already 20-25% gold in the portfolio is just diversifying the equities by going to global market weight (domestic:international) enough of a hedge against U.S. decline without getting into international bonds?

[ochotona]

Clearly, gold is a currency. So definitely, 25% is a good amount.

I have been taking my cues from what the Global Market Portfolio is... the GMP. If you take ALL stocks, ALL bonds in the world, the US contributes roughly 40% to that total. So if you just wanted to hold the world, you'd have 60% exUS, and 40% US. That seems overboard to me as a US investor.

There is a Vanguard world bond fund which is half US, half exUS (I forgot the symbol). As for stocks, VT used to be 50% US, but with the stock bubble ofpost-COVID grew to 65% US.

I'm allowing myself to go up to roughly 50% eX US total assets... which means (50% - exUS stocks% - gold%) = exUS fixed income%. And if doing this whipsaws me too much, I'll give it up.

But there will be a point where I will abandon exUS bonds, and that is if the USD Index falls to near 80, then the move is probably mostly or completely done. 109 to 81 would be a 25% Dollar devaluation. See this:

https://www.macrotrends.net/1329/us-dol ... ical-chart

But what does this mean for the buy-and-hold PP? Maybe nothing, or maybe put a 5%-10% of the US Treasuries pie slice into IGOV (duration is ~7 years BTW) if you really have a hankering to widen your currency footprint.

How would you feel as a foreign central bank if your US Treasury holdings devalued 25% over a relatively short period of time? That would cause me concern. No wonder they are buying gold, now a Tier 1 asset under Basel 3.

[Kevin K.]

Thanks for the thoughtful reply ochotona!

Ben Carlson has a great post on the fluctuating value of the U.S. dollar that directly relates to this discussion:

https://awealthofcommonsense.com/2025/0 ... portfolio/

From the looks of it both gold and international stocks are basically hedges against a weak dollar, though of course gold has additional unique benefits as SHTF insurance when people start questioning the value of fiat currencies altogether.

And Cullen Roche's latest really gets into the long-duration nature of stocks and the REALLY long, totally unpredictable duration of holding gold:

https://disciplinefunds.com/2025/04/30/ ... data-dump/

I'm not one to make sudden changes in any portfolio these days (having learned some lessons from previous mistakes) but an incremental change that I think probably makes sense for the PP would be to add X-US stocks in accordance with global market weights (~35% right now) or use an ETF like VT that does it for you and keeps you from meddling.



Carlson rightly points out that for U.S. investors anyway sticking with Treasuries should remain the default on the fixed income side of things.