Global Philosophy

CLS’s philosophy of pursuing global portfolio diversification means that the CLS portfolio management team can look all over the world for investments that offer an optimal balance of risk and return. This flexible investment approach gives us the best opportunity to adapt portfolios when markets change, as certain asset classes are likely to perform well even when others are not. The broader our investment universe, the more places we can look for opportunity. In fact, the risk in CLS’s Risk-Budgeted portfolios is measured against a diversified equity portfolio that is a blend of 60% to a total U.S. market index and 40% to a total international (ex-U.S.) market index (capitalization-weighted).

Explore why CLS believes in allocating a large percentage of porfolios to non-U.S. stocks

We believe such a large percentage of our diversified equity portfolio should be in non-U.S. stocks because international investments provide:

  • Diversification, which may provide more stable returns over time.
  • Portfolio stability, through addition of uncorrelated or lowly correlated assets.
  • Access to emerging and frontier markets, whose general lack of correlation with each other means they provide diversification benefits and growth opportunities.
  • More dividend opportunities. Historically, dividends from developed international markets have been higher than the U.S. market and have grown at a faster rate.
  • Access to foreign currency and fixed income investment opportunities. Countries have differing interest rates and inflation levels, which are two main drivers of bond returns.

International equities have grown to account for about half of the global equity market. However, it is difficult, and sometimes impossible, to invest in individual securities in international markets. Accordingly, CLS provides investors access to international securities through portfolios of ETFs. These types of funds offer a simple way to access a broadly diversified international portfolio at a low cost and with minimal effort.