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International Diversification

Beyond the US: an allocation framework

5 min · For educational purposes only

Market-cap weights point to roughly 60% US, 25% developed ex-US, 12% EM, 3% frontier. Adjustments from there are deliberate, not accidental.

Starting point: market-cap weights

  • United States: ~60% of global equity market cap
  • Developed ex-US (Europe, Japan, UK): ~25%
  • Emerging markets ex-India: ~12%
  • Frontier and small developed: ~3%

Indian-resident adjustments

An Indian-resident already has substantial EM-India exposure through their domestic portfolio. Adding more EM through the global sleeve double-counts. Most institutional advisors therefore underweight EM-ex-India in the global sleeve and overweight DM-ex-US to balance against the heavy US weighting.

A typical adjusted starting point for an Indian global sleeve: 50% US, 30% developed ex-US, 15% EM-ex-India, 5% alternatives.

Key takeaways

  • Start with market-cap weights, then adjust for home bias.
  • EM-ex-India is the right unit, not EM-including-India.
  • DM-ex-US is the underrated diversifier.
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