International Funds: How Much Foreign Exposure Do You Need?
Roughly 40% of global market value sits outside the US. Most US portfolios hold far less than that.
At a glance
Figures checked 1 Sep 2026
What to take away
- Common allocations run from 20% to 40% of the equity portion.
- Currency movements add volatility and are not hedged in most broad funds.
- International has underperformed US equities for much of the past decade, which is not a forecast either way.
International funds hold developed and emerging market companies outside the US. They add exposure to different economies, different sectors and different currencies.
The uncomfortable part
International equities lagged US equities badly through much of the 2010s and early 2020s. That history makes the allocation feel like a mistake in hindsight, which is exactly when people abandon it — usually shortly before the relationship reverses. Leadership between regions has switched several times over longer periods.
Developed, emerging, or both
A total international fund holds both, which is the simplest approach. Separate developed and emerging funds let you control the weight, at the cost of another decision to maintain.
Hold international funds in a taxable account where possible if you want to claim the foreign tax credit, which is generally unavailable inside an IRA.
Common questions
Partly. Large US companies earn abroad, but you still hold US-listed equity subject to US market pricing and US-specific risks.