Bob Pozen: U.S. Investors Should Put Half of Their 401(k)s Into Global Assets

‘From a diversification point of view, half of the world’s market assets are outside of the U.S.’

Mutual fund authority Bob Pozen told AdvisorOne on Friday that Americans should consider investing in international funds twice as much as they do now.

During an interview promoting his new book, The Fund Industry: How Your Money Is Managed, co-written with Theresa Hamacher, Pozen said that most Americans are under-invested internationally, and they should put as much as half of their 401(k) money into global securities.

“From a diversification point of view, half of the world’s market assets are outside of the United States, but it’s the rare U.S. individual who has half of his or her portfolio outside,” said Pozen, who is chairman emeritus of MFS Investment Management and a former vice chairman of Fidelity Investments.

“When you think about it, your job is here, your house is here," said Pozen (left). "If you put half of your 401(k) internationally, you would actually have about 25% or 30% of your assets internationally. We’re not saying you should be at half, but the average retail investor has something like 10% or 15% invested internationally. In our view, that’s much too low.”

Exactly how much should be invested internationally depends on an investor’s appetite for risk, Pozen added. His new book’s final section, “The Internationalization of Mutual Funds,” notes that U.S. investors have been increasingly willing to venture outside their home market “mainly because the potential rewards have been very attractive, especially in the developing world.”

Click here to read the Bob Pozen Weekend Interview in its entirety at AdvisorOne.com.

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