It isn’t out of choice that Paul Carroll’s travels around the globe inform his investment decisions.
A professional pilot for a major airline company, Carroll, CFP and founder of Efficient Wealth Management in Houston, takes to the skies once a month, flying across the ocean to such varied destinations as London, England, and Lagos, Nigeria. These visits, he says, help him greatly in shaping his views on the ways of the world and the many opportunities that international investing can bring.
“Flying is a great way to mix two jobs and make intelligent decisions,” Carroll says, “and as an investment advisor, being on the road this way lets me learn a whole lot about what’s going on overseas.”
But even if he weren’t a pilot, Carroll is the kind of advisor who believes that “you cannot avoid the world and succeed” in investing. His goal at Efficient Wealth Management is to build carefully designed asset allocation models for his clients that on the equity side of the fence, always have a 30% exposure to international markets.
“I base this on interesting longitudinal studies that have been done by Vanguard and others, studies that show that to optimize the equity portion of an investment portfolio, you should have at least that amount overseas,” he said.
Carroll’s approach makes even more sense in today’s rapidly changing world, where most domestic companies are actually global in nature. Capturing the upside of that means that Carroll splits his portfolios’ international segment into global large cap corporates; emerging markets and global real estate – the one sector that is a true indicator of the way in which the world has changed and continues to change.
“After World War II, there was a whole new level of affluence in the U.S. and a high dividend of productivity was paid out,” Carroll said. “But today, the U.S. and the rest of the Western world, is coming to the end of that demographic dividend. It is now hitting a whole swath of other countries in the world but they have something that we didn’t have: A guide on how to build an economy.”