Retirement Insights

Non-US Potential Opportunities for Retirement Savers

Non-US Potential Opportunities for Retirement Savers

Dynamics that emerged in the aftermath of the financial crisis—up to and including the recent turbulence surrounding the Covid-19 pandemic—appear to have reinforced this longstanding domestic predisposition, which is evident in both participant-directed allocations as well as allocation vehicles like target-date funds. Closer examination, however, reveals a far more nuanced global investment environment, one that long-term investors, in particular, ignore at their own peril. Through thoughtful plan design and consistent communication, plan sponsors may be able to build retirement programs that provide participants with investment options consistent with the global opportunity set and allow meaningful access to non-US strategies and the diversification benefits they may provide.

Key Takeaways

  • Key-Takeaway

    Retirement savers are no different than other investors in general as they demonstrate “home-country bias” in their portfolio allocations. Plan sponsors, however, may be uniquely positioned to influence this ingrained behavioral tendency and potentially improve participant outcomes.

  • Key-Takeaway

    Long-term investors, in particular, may benefit from the diversification benefits—including potentially better risk-adjusted returns over time—that may be gained through exposure to foreign markets subject to a variety of unique risk factors and performance drivers.

  • Key-Takeaway

    Though relative performance in recent years has favored the US, equity market leadership has been more balanced over the long term. Market dynamics of late, meanwhile, suggest that now may be a good time for those skeptical about the potential benefits of international diversification to take a second look.

  • Key-Takeaway

    Leveraging a long history of global stock-picking, First Eagle selectively constructs portfolios that seek to participate in international market advances while mitigating the downside in an effort to avoid the permanent impairment of capital and thus increase return potential over the long term