Underweighting the US using index funds

MaxiRobriguez

The simplest way to achieve reduced US weighting from a global fund is to add a global-ex-US fund?

Billycock

For clarification, the mentions of cycle, over what period of time would one define a cycle?

bostonerimus

MaxiRobriguez said:

The simplest way to achieve reduced US weighting from a global fund is to add a global-ex-US fund?

Agreed, Vanguard keeps telling me that I need more international stocks so last week I just bought VTIAX which is an international equity fund ex-US.

MX5huggy

Billycock said:

For clarification, the mentions of cycle, over what period of time would one define a cycle?

It’s not a period of time, it’s good times followed by bad. You don’t know how long each portion of that will last. https://en.m.wikipedia.org/wiki/Business_cycle

Prism

MaxiRobriguez said:

The simplest way to achieve reduced US weighting from a global fund is to add a global-ex-US fund?

It would be but are there any available on UK platforms? I have not seen one.

Bobziz

So the assumption is that the US is over valued and therefore growth may be slower than other regions or a larger correction may occur. Does history suggest that this  assumption is likely to be correct ?

Prism

Bobziz said:

So the assumption is that the US is over valued and therefore growth may be slower than other regions or a larger correction may occur. Does history suggest that this  assumption is likely to be correct ?

Not growth in the companies but it suggests that equity returns are typically lower for the next 10 years when prices are higher. Red is where we are at right now and dark green is cheap.

thegentleway

Bobziz said:

So the assumption is that the US is over valued and therefore growth may be slower than other regions or a larger correction may occur. Does history suggest that this  assumption is likely to be correct ?

yeah reversion to the mean implies periods of higher returns are followed by periods of lower returns.

Billycock

MX5huggy said:

Billycock said:

For clarification, the mentions of cycle, over what period of time would one define a cycle?

It’s not a period of time, it’s good times followed by bad. You don’t know how long each portion of that will last. https://en.m.wikipedia.org/wiki/Business_cycle

Ok understood, so when referring to cycles its somewhat nonsensical unless the actual period is specified, could be talking about light years ago.

strawb_shortcake

Prism said:

MaxiRobriguez said:

The simplest way to achieve reduced US weighting from a global fund is to add a global-ex-US fund?

It would be but are there any available on UK platforms? I have not seen one.

I've been looking at not seen one. I haven't got that much invested but would like to add some balance away from the top 10 holdings in my fund