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1.
Why do many target-date funds and indexes allocate a smaller percentage of assets to foreign stocks as investors near retirement?
Because of currency risk. Because foreign assets are not denominated in dollars, there's a chance that foreign currencies could dip as an investor approaches retirement, thereby depressing the purchasing power of a heavily globalized portfolio at an inopportune time.
2.
Who is a global market index fund best suited for?
Investors who want the market to decide regional and country weightings. These funds have made it easier for many to get into foreign markets.
3.
What can global market index funds provide investors?
Both of the above. Global market index funds have made foreign investing easier for many investors.
4.
How should you determine what your foreign allocation should be?
Set a strategic, long-term allocation to foreign stocks and stick with it, making only minor adjustments to rebalance.
5.
What factor complicates the decision of how much your foreign allocation should be?
Both of the above. Investing in foreign markets is not easy to pin down.
