ICOL - Considering Capital: Allocation Strategy For Global Investing
Introduction
Last month I wrote about why investors should consider investing in a global equity index (such as the VT ETF). In summary, I said that global investing provides exposure to different, not perfectly correlated economies. So if you don’t have any reason to believe that any particular economy will outperform, or underperform, in terms of risk-adjusted returns (such as under efficient markets), a global, market-cap-weighted allocation is optimal. Another idea that I pointed out in that article is that given the non-perfect correlation between economies, it might be wise to diversify and allocate your