Hello folks,
I’ve seen lots of discussions about US vs global exposure, home bias, and whether diversification is worth it at all. I’m comfortable with the theory of diversification, but what I’m struggling with is something more practical: **where to stop diversifying.**
Specifically, how to reason about the trade-off boundary between concentration and complexity.
On one side:
* The US market has delivered exceptional returns for a long time
* Many broad ETFs are already US-heavy by design
* Staying simple and US-tilted has clearly worked for a lot of people
* Being underweight the US has felt like a persistent performance drag over the past decade+
On the other side:
* I don’t know when or if that trend changes (probably nobody knows)
* Staying very US-heavy feels like accepting a large, concentrated bet
* Adding international exposure seems prudent from a risk perspective, but also introduces complexity and potential tracking regret
So the questions I’m trying to reason through are less about whether to diversify, and more about **how much is rational**:
* At what point does incremental geographic diversification meaningfully reduce risk, rather than just dilute returns?
* Is there a principled argument for saying “this level of diversification is good enough” and consciously accepting some concentration risk?
* How do you personally decide between:
* Staying US-heavy and simple
* Versus adding global exposure you may not fully believe in, primarily for risk control?
I’m not looking for portfolio prescriptions or ticker suggestions. I’m more interested in **how experienced investors think about this trade-off**, especially those who’ve stuck with their approach through different market regimes.
Curious to hear how others reason about this. Thank you very much!