Slicing the World Economic Pie

Capitalism and innovation have positioned the United States as the most dominant economic force in the world for the past century. As a result, the US has also been the biggest slice of the world economic pie, historically representing more than 70% of the total world market of investable opportunity.

While the United States maintains its position as the largest single country in the world marketplace, the rest of the world is catching up. This probably comes as no surprise to you. We generally have a sense that the world is a smaller place — due, among other things, to increased ease of travel abroad and the instant reporting of news, bringing world events to our electronic devices as the event is happening.

  Global Regional Weighting of Market Capitalization

Global Regional Weighting of Market Capitalization

Evidence of the world’s shifting market can be seen over the last 40 years in the chart below, demonstrating the relative market capitalization of the US, International Developed countries and Emerging Market countries.

Recognizing the downward slope trend line of US market capitalization over the past 40 years, Triune will be making an adjustment in the composition of the equity portion of some portfolios. Although market weightings could be more heavily skewed toward international holdings at this time, note that the world market weightings are not static. They fluctuate over time, so we believe the adjustment is a prudent allocation.  Furthermore, there are reasons (lower volatility, taxes, currency risk, lower trading cost, etc.) for a home bias by maintaining an overweighted position to the US market.

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Not all Triune clients will be impacted by this change, and no action is necessary. The timing of this change in your account will depend upon the type of account (taxable or non-taxable) you own and when you take your IRA distribution. As always, we welcome your questions. Please contact us if you would like to discuss this information. It is our privilege to be your Partners in Conversation.