5 Myths of International Investing - Fidelity Investments
FIDELITY INTERNATIONAL UPDATE
5 Myths of International Investing
June 2019
1
Why are we here?
For a long-term investment portfolio, Fidelity recommends investors maintain a dedicated allocation to international equity
How much?
? Ranges from 6% to 30% of the TOTAL portfolio ? Consistent 30% of the EQUITY portfolio
CONSERVATIVE
BALANCED
GROWTH
14% 6%
80%
50%
35% 15%
30% 21%
49%
AGGRESSIVE GROWTH
15%
26%
59%
MOST AGGRESSIVE
30% 70%
U.S. Equity
International Equity
Fixed Income/Cash
2
Why are we here?
Reasons for Not Investing Internationally
Geo-political uncertainty
Have enough international exposure via U.S. stocks
14%
International investments are too volatile/risky
14%
US market has the best companies/opportunities
13%
Strength of US dollar may impact returns negatively
13%
Returns from US market is sufficient
8%
Lack of transparency
3%
Too expensive
1%
Source: Fidelity GreenLineForum Survey, February 2016 "Attitudes Towards International Investing Greenline Forum Research Highlights. Q9. Which of the following best describes the primary reason for your decision to not invest internationally? Respondents (n=154) and currently do not own international equity. Remainder not shown, "all other" responses totaling to 100%. 3
21%
Five Myths of International Investing
4
Myth 1: International investing is too risky
Standard Deviation (%)
Average Annual Volatility (1950-2019)
16% 15.1%
14% 12%
14.3%
12.8%
10%
8%
6%
4%
2%
0% 100%
International
100% S&P 500
70% S&P 500 / 30% International
Reality
Adding international equities to a U.S. equity portfolio can actually lower overall portfolio risk because of diversification.
Past performance is no guarantee of future results. Diversification does not ensure a profit or protect against loss. Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.
Hypothetical "globally balanced portfolio" is rebalanced annually in 70% U.S. and 30% foreign stocks. U.S. equities: S&P 500 Total Return Index; International equities: GFD World x-US Return Index (1950-70), MSCI EAFE (1970-87), and MSCI ACWI ex-US Index (1987-present). Source: Bloomberg Finance L.P., Fidelity Investments (AART), as of June 30, 2019.
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