Adding international stocks to your portfolio seems like a good idea.

You were told that international stocks can bring diversification and some extra returns for your portfolio. Somehow they never materialize.

Since the late 1990s, Global ETFs have underperformed the US Market and here is why:

• Global ETFs are quoted in USD (or your local currency), hence not reflecting the true performance of the underlying markets, only the currency translation of the underlying market. You are basically buying a basket of currency.
• Each local market are influenced by currency fluctuations, with positive correlations in some cases and negative correlations in others. What this means is that local markets will go up or down depending on their currency exchange rate, creating buying or selling opportunities for international investors, independently of the real financial performance of the underlying stocks in that market.

  Do you really want to invest in a local equity market so strongly influenced by currency fluctuations?

• To mitigate the currency impact, some Global ETFs are currency hedged, and this is the start of a good thing. However, it doesn’t solve the issues that these international currency waves create, that is the distortion in the perceived value of a local equity market, hence not reflecting the financial reality of the underlying stocks in that local market.
• Globalization can create unforeseen headwinds for local equity markets, and local government policies create sidewinds that can impact significantly those markets. All this in an organized chaos that create a lot of uncertainties for the future performance of these local equity markets.
• Global ETFs are roughly exposed to 20 to 50 countries. You are basically multiplying by 50x the number of risks and future problems. This is not good for an overall portfolio when your main target is to increase your wealth, not expose yourself to international currency storms.

Adding ETFs in your portfolio should have a purpose: decrease portfolio risks or increase your portfolio returns.

Global ETFs do neither.

If you want to build a safe portfolio without those kinds of risks then you can start now your safe investment journey here.​