One-liner for my global equity allocation

According to S&P/Citigroup Global Equity Index (June 2007), the global equity market capitalization looks like the chart below.

Global Equity Market Capitalization, June 2007

Note 1: I categorize South Korea under Asia Pacific Emerging (same as MSCI indices), whereas S&P/Citigroup categorizes South Korea under Asia Pacific Developed Market.

Note 2: Pacific Ex Japan are developed markets in the region which includes Australia, Hong Kong, New Zealand and Singapore.

Let me round the above market capitalization to the nearest 5%, exclude Canada and consolidate several emerging market to simplify it to:

  • 45% U.S.
  • 30% Europe
  • 10% Japan
  • 05% Pacific Ex Japan
  • 05% Asia Pacific Emerging
  • 05% Other Emerging (Latin America, European Emerging, Mid-East and Africa)

Compare the simplified market capitalization with my global equity allocation, which is:

  • 45% U.S.
  • 30% Europe
  • 10% Japan
  • 15% Asia Pacific Ex Japan (7.5% Pacific Ex Japan and 7.5% Asia Pacific Emerging)

I can describe my global equity allocation with a one liner:

Market capitalization weighted for U.S., Europe and Japan but overweigh Asia Pacific Ex Japan at the expense of Other Emerging Markets.

So when the equity market is volatile and I am tempted to do something stupid, I shall recite this one-liner in my heart to see if I really need to trade on my portfolio. Amen.


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