When ordinary investors bought balanced funds, they were content to hold the traditional asset mix of 60% in U.S. stocks, 40% in investment-grade bonds
Technically, investing half the portfolio’s equities and 25% of its bonds internationally would still have been underweight foreign securities, which dominated both markets, but in practice, given that most investors strongly prefer investments from their home country, adopting such a global approach would have meant betting against the United States.
Asset Allocation: The Power of Traditional Thinking
When ordinary investors bought balanced funds, they were content to hold the traditional asset mix of 60% in U.S. stocks, 40% in investment-grade bonds
Technically, investing half the portfolio’s equities and 25% of its bonds internationally would still have been underweight foreign securities, which dominated both markets, but in practice, given that most investors strongly prefer investments from their home country, adopting such a global approach would have meant betting against the United States.