"However, for investors seeking more diversification, I think it can pay dividends (quite literally) to consider complementing a U.S. equity-heavy portfolio with some European names. Sure, going 100% (or close to it) in the U.S. names will grant you a front-row seat to America's long-term ascent, and there's nothing fundamentally wrong with doing so. However, I believe it doesn't hurt to add some international exposure as well for the value of geographic diversification and, perhaps more importantly, lower valuations."
"And while the higher valuations aren't indicative of a bubble in AI, at least in my opinion, I do think higher multiples do set the stage for more modest returns moving forward. As such, diversifying outside the U.S. might just be a ticket to cheaper valuations and perhaps less downside if an AI upset were to occur in the future,"
Vanguard ETFs such as VTI and VOO provide reliable, low-maintenance exposure to the U.S. market. Other Vanguard funds can potentially outperform the S&P 500 in a given year but beating the index remains difficult without a clear edge. Adding European stocks can enhance diversification and provide access to lower valuations compared with the elevated U.S. market after a multiyear bull run. Lower valuations may translate to more modest downside and different return prospects, particularly if an AI-driven rerating affects U.S. tech leaders. Diversifying internationally can be especially attractive for investors concerned about concentrated AI-related risks.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]