International allocation

Discussion of the Stock portion of the Permanent Portfolio

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foglifter
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International allocation

Post by foglifter » Thu Sep 06, 2018 3:17 pm

This post is about US-based PP, so "international" means ex-US equities.

The question of adding foreign stocks into PP was discussed many times and I don't want to resurrect the beast again. Let's assume we decided that we want to add some international exposure. Now, given high correlations in the large cap area (and the fact that a heavy chunk of SP500 companies revenue is coming from abroad) I decided to limit my international exposure to small and/or small/medium caps. VSS seems like a good option covering both developed and emerging markets with the lowest ER. I also thought about using a 2-fund setup: SCZ (developed) and DGS (emerging).

I wonder what others are using in their PP for the international exposure. I'm not set on an ETF-only approach, but there's not that many decent low-cost mutual funds in the small cap area. Not talking about active funds since this is not a VP forum.
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
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pugchief
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Re: International allocation

Post by pugchief » Thu Sep 06, 2018 4:52 pm

SCHF and VWO

And I think you can reduce your gold holdings if you own unhedged ex-US stocks, as the currency differential acts similarly to gold as a USD hedge.
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foglifter
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Re: International allocation

Post by foglifter » Thu Sep 06, 2018 11:59 pm

pugchief wrote:
Thu Sep 06, 2018 4:52 pm
SCHF and VWO

And I think you can reduce your gold holdings if you own unhedged ex-US stocks, as the currency differential acts similarly to gold as a USD hedge.
Interesting, so I guess a one-fund option in this case would be something like VEU.

BTW thanks for mentioning the reduced gold portion, I haven't paid attention to this topic when it was discussed here long time ago... I actually revisited many old posts and was surprised how a second reading yielded some things I overlooked/skipped back then.
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
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