Saturday, January 3, 2015

S&P500 and international exposure

I was thinking about asset allocation today - specifically: "what is international exposure?"

In particular, how much international exposure is built into the S&P500, or should we have explicit international exposure?  

Well, with some quick googling it seems the S&P 500 companies have anywhere from 33% to 50% of revenues coming from outside the U.S.  On the low end , this article mentions research showing that 33% of the revenue from S&P500 companies is derived outside of the US.  Here's another article that says 50% of S&P500 revenue comes from foreign sources.    This story from 2011 puts the figure at 47%.  I'm not sure why the wide range, but we're probably safe saying many of the big American companies have significant international exposure - anywhere from 33% to 50% in aggregate. 

So do I need an explicit international index in my portfolio?  After seeing this I'm less concerned about needing that, especially if I have a large S&P500 exposure or invest in US large cap companies.  In particular, I would want to make sure I don't inadvertently over-weight international by calling the S&P500 "domestic" exposure when it's probably close to a 50/50 split of domestic/international exposure already.

No comments: