How Much International Stock Should You Own?
One of the first things I look at when new clients start with me is how their portfolio is split between US and international stocks. Some come in with nearly 100% US stocks.
A portfolio built almost entirely around one country's market isn't really diversification. It's a prediction: a bet that the next 15 years look like the last 15.
Why People End Up with So Much US Stock
Investors in every country tend to overweight their domestic market. It's familiar, it's what they hear about, it's what's covered in the financial press. It doesn't require a conscious decision. This is called home bias.
In the US, home bias got reinforced by something else: 15 years of American stocks outperforming nearly everything else. US holdings grew faster, which meant their share of the portfolio grew too, without anyone making an active decision to concentrate.
Past US Dominance May Not Predict the Future
From 2010 through 2024, the S&P 500 returned roughly 13% annualized. The MSCI EAFE index, which tracks developed international markets in Europe, Asia, and Australia, returned roughly 7% over the same period. That's a real gap.
But 2025 changed the picture. International stocks outperformed US stocks for the year. Part of the reason is valuation: international markets entered this period cheaper by most measures. Part of it is currency.
When the dollar weakens against other currencies, US investors who own international stocks get an extra boost on top of whatever those stocks returned locally. A European stock that returns 8% in euros is worth even more in dollar terms when the euro strengthens against the dollar. The dollar weakened significantly in 2025, which added to international returns for US investors.
Why Diversification Feels Uncomfortable
Diversification means owning what hasn't worked recently, but after a decade of international underperformance, trimming US exposure and adding to international funds feels like leaving money on the table. The instinct is to stay with what's been working. But that instinct is exactly backwards.
You diversify because you don't know which market wins the next decade. If you already knew, concentration would be the right strategy. The discomfort of holding an underperforming asset class is not a signal to sell it. It's often a signal that the diversification is working as intended.
How Much International Exposure Makes Sense
A useful starting point is to look at the global stock market as a whole. By market value, US stocks make up roughly 60% of the world's publicly traded companies. International stocks make up the other 40%. That's not a recommendation. It's just what the market looks like.
It's not unusual to see someone sitting at 85-95% US equity exposure, or higher. That's a significant distance from what a globally balanced portfolio would look like.
There are legitimate reasons to hold somewhat more US exposure than the global average. You earn in dollars, spend in dollars, and will retire in dollars. Some tilt toward home is defensible.
But there's a meaningful difference between a considered 65-75% US allocation and an unconsidered 90-100% one. The question worth asking is which one you actually have.
If you haven't looked carefully at your global allocation recently, it's worth doing.
If you'd like to learn more about how I approach portfolio construction, you can read about my investment management process. And if you'd like a second set of eyes on your portfolio, I'm happy to take a look. You can schedule a free introductory call.