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Adding international exposure is one of the first steps toward a diversified portfolio. Even minimalist investors usually carve out a portion of their portfolios for non-U.S. stocks after adding exposure to domestic stocks and bonds. International stocks are subject to myriad factors that can lead to divergent performance, including local market conditions, currency movements, exposure to different sectors and industries, and political and economic factors. These traits mean they often show different performance patterns both relative to the U.S. market and versus other international markets.
However, in our recent examination of asset-class correlations, the 2021 Diversification Landscape, we found that the benefits of international diversification can be surprisingly elusive.
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International Stocks Awaken, Boosting the Case for This Portfolio April 9, 2021
With international stocks delivering in the first quarter and showing signs of a longer-lasting trend, broad approaches such as the WisdomTree Strategic Model Portfolio could serve clients well.
“This model portfolio is designed for growth-oriented investors with a long-term horizon looking to maximize long-term potential for capital growth through a globally diversified set of equity and fixed income ETFs. The model portfolio strives to deliver performance in excess of an 80/20 combination of a broad-based global equity benchmark and a U.S. aggregate bond index,” according to WisdomTree.
A perk of this model portfolio is that spans geographies and market capitalizations, including both developed markets and emerging economies. It’s also levered to some of the sectors leading the ex-U.S. equity resurgence.