The American Association of Individual Investors is a non profit organization who's purpose is to arm investors with the tools and knowledge to manage their finances effectively and profitably. Part 3 Country Domination T he United States and Japan dominate world equity markets. International equity markets, investments outside the U.S., are overshadowed by Japan. While Japan s market has dropped sharply over the last few years, it still is the largest international market for U.S. investors. You cannot be effectively diversified internationally without substantial percentages of your international equity portfolio in both Europe and the Pacific area.
Most individual investors invest internationally through mutual funds.
International mutual funds have vastly different country weightings that may not be apparent from their names, although some mutual funds such as the Japan Fund have country portfolio weightings that are obvious. Table 1 lists country weightings for all of the international funds covered by AAII s Quarterly No-Load Mutual Fund Update . The recent country weightings appear in quarterly, semiannual, and annual mutual fund reports and are subject to change from period to period. Countries not shown because of minimal representation are Bermuda, Greece, Hungary, India, Poland, and Turkey, all countries with limited equity markets. A few generalizations can be drawn from Table 1 .