Is your portfolio sticking too close to home?

What you need to know about home country bias

11 Oct 2018

Questions you can ask your UBS Financial Advisor:

  • Is my portfolio diversified across US and non-US investments?
  • Is it time to increase my global exposure?
  • Do I have a Liquidity and Longevity strategy in place to weather volatility throughout my retirement?

Most investment advisors, including UBS, recommend that investors hold globally diversified portfolios. So why do investors hesitate? It comes down to portfolio theory vs. behavioral finance. Over the very long run, global equities and US equities generally see the same returns. But investors often use the S&P 500 as a benchmark, and that isn’t an accurate measure for global markets. Inflation and the price of the dollar also play a role in returns. A non-US equity at first glance may appear as a lower return. But when you consider all the variables, it may actually be higher.

What should you do? Here are a few tips from our latest Modern Retirement Monthly (PDF, 153 KB).

  • Be sure to consider all the factors. Investors who use US equities as a benchmark for non-US equities may feel uncomfortable investing globally. Broadening how you view global markets will help you make informed decisions.
  • Expect to go through long US and non-US leadership cycles. This is expected.
  • Now may be a good time to consider diversifying globally. The earnings boost from the US tax is fading, and that could lead to global equities performing better.

Are you missing out on global opportunities? Together we can find an answer. Connect with your UBS Financial Advisor today or find one