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.