The Suboptimal Portfolio Allocation Of US Fund Investors

As we enter a period of market instability, it might be an appropriate time for re-evaluating portfolio allocation strategies. Morningstar suggests that the average US fund investor's stock portfolio sits 68% in the US, 6% in emerging markets and 26% in the rest of the world (while the latter makes up 45% of the world's stock market value). Hence two characteristics of US fund investors follow: 1) they are US-centric; 2) if they are going to venture outside the US, it is going to have be in high-growth emerging markets (in fact, 95% of such investments are specialised in BRICs).

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