This would be a good moment to illustrate the benefits of global diversification. You hear us speak often about the need to allocate some of your portfolio to international stocks and bonds and to stay disciplined. But let’s be real; it’s difficult to stay this course after a long stretch where US domestic stocks outperform international stocks. Even among the financial “pundits”, we hear recent advice like this: “Europe is for vacations, not investing!”
Until it’s not.
Here is some year-to-date performance data of the low-cost funds you will find in our portfolios as reported by Morningstar (3/6/2025):
| Fund Name | YTD Performance (%) |
| Vanguard S&P 500 | -2.25 |
| DFA US High Profitability | 0.89 |
| DFA US Large Cap Value | 1.50 |
| DFA US Small Cap Value | -6.69 |
| Avantis US Small Equity | -8.26 |
| DFA Global Real Estate | 2.98 |
| DFA International Large Cap | 9.24 |
| DFA International Small Cap | 6.90 |
| DFA Emerging Markets Core | 2.56 |
As you can see, the international component of our portfolios significantly improved our overall returns and without them, the recent negative impact of some US stock asset classes would be worse. Now, does that mean we should jump on the bandwagon and move all our stock allocation overseas? Nope! The benefit accrues to those who were already invested there (aka disciplined) and who reaped the full returns.
To recap: Global diversification smooths out returns and reduces market risk in the long run. Here is a very practical, real-life example of why this principle is so central to our investment management philosophy.
Winfred Jacob, CFP®
Senior Financial Advisor
