It's a great time to be overseas. After an exhausting stretch of underperformance for the last three, five, and 10- years, international and emerging-markets stocks have finally made a comeback in 2017, outpacing the U.S. market through October. Investors that want more tempered exposure to these asset classes outside of the U.S. should look to the world allocation category.
Heather Larsen: Funds in the world allocation category are a diverse bunch. These funds span a variety of investment styles, market capitalizations, and regional exposures. These portfolios, typically 40% of assets abroad, less than 70% of assets in stocks, and at least 10% of assets in bonds.
Some of Morningstar's top world allocation picks include Silver-rated American Funds Global Balanced, which largely sticks to its neutral 60/40 stock/bond split as management looks to add value through careful fundamental research rather than tactical calls.
Bronze-rated JPMorgan Global Allocation features a more flexible mandate, as at any given point in time this fund's stock/bond exposure can range from 10% of 90% of assets, representing the JPMorgan multiasset team's best thinking.
T. Rowe Price Global Allocation, rated Bronze, targets 60% in stocks, 29% in bonds, and 11% in alternatives but will make small, meaningful tactical tilts based on its asset allocation committees relative valuation forecasts.