Via Market Watch.
Here are some corners of the stock and bond markets that you may get too much or too little of in your index fund.
- Small-Cap Stocks – if you invest in a large cap index like the S&P 500 you will miss the opportunity to invest in smaller companies.
- Changing International Indexes – one investment firm may consider South Korea an emerging market, another may define it as a developed market.
- Canadian Stocks – most international index funds son’t consider Canada as part of their foreign index.
- Small Cap International Stocks – many international indexes have no exposure to small cap stocks, which may work against you.
- Chinese Stocks – China limits the ways in which foreigners invest in its companies; read the prospectus carefully.
- Greece – if your foreign bond index is weighted toward the amount of debt outstanding, you could own too much Greek debt.