After we completed the construction of our US Large Cap Equity Model Portfolio Strategy, we knew an International Equity Strategy would have a high demand among our clients and with reason. The latest asset mix report from PIAC shown below illustrates the increasing appetite for this specific asset class:
The general asset allocation to international equities increased slightly from 23.7% in 2006 to 25.4% in 2016. Institutional portfolio managers are reducing their asset allocation in EAFE (21 developed countries) for a global approach as markets became more open and transparent over the last decade.
Considering this shift to global and our need to create an international equity Strategy stripped out of US equities because we already have a US product, we decided to use the MSCI ACWI Ex US as our benchmark. ACWI stands for All Country World Index and includes developed and emerging countries.
Our International Equity Strategy follows the same investment philosophy that we are known for: 1) Quality At Reasonable Price (QARP), 2) Undexed (not following our benchmark weights), 3) Concentrated (25 positions) and 4) Low portfolio turnover (to lower trading costs and tax efficiency).
If an investor desires a global equity model portfolio, we recommend investing the first half in our US Large Cap Equity Strategy and the other half in our International Equity Strategy. This mimics the right geographic allocation as the United States represent 52.6% of the ACWI Index as of June 2017.
We invite you to read the documentation about our International Equity Strategy by becoming a member and to contact us if you are interested to receive line-by-line signals. If you have any question, we are more than happy to provide you with the right answers as soon as possible.
