Holding Eurozone assets?

From 2009 till 2024, holding Eurozone stocks increased risk and diminished return, as this plot shows:

Going from left to right, I simulated risk and return of holding only Eurozone stocks (MSCI EMU IMI), or only World Ex Eurozone (MSCI World Ex EMU IMI). For the period 2000 and 2024 the plot is similar.

In terms of asset allocation, what thoughts is this plot suggesting to you?
I personally gather that we should not overweight EU above its market cap.
And that my predecessors should have removed EU from their portfolios (modulo tax considerations and what not).

Do you agree/have anything to add?


Tempting, but we cannot see the future by looking at past performances.

Try plotting an all apple portfolio 2009-2024 against world ex EU, what should we do now? What if you plot all the different regions against each other? :slightly_smiling_face:

Regarding volatility:

You’re comparing a region against “the rest”, volatility logically is higher in a smaller part of the whole.


I think the comment about what predecessors should have done is about right. Although they had no way to know this upfront.

Talking about what we should be doing today.
I think if one doesn’t want to have Home (regional) bias, then using market weight for Eurozone sounds right if we say we believe in following

  • no idea what will happen in future
  • market has already priced in what is known

But I would like to tell you that a lot of Modeling from Vanguard, JP Morgan etc actually suggests that they expect US stocks to slightly underperform in next 10 years. At least that’s what the expected return models suggest (they can be wrong). Links below.

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I’ve really avoided EU for most of the last decade, but have started this year to buy the odd stock here and there.

Doesn’t Worldex-EU overperformed because the US overperformed ?

According to me, it is true that in Europe, lots of countries with a lot of good companies (in number, not cap weighted) are not in the eurozone (Denmark, Sweden, Switzerland etc), while some countries in the eurozone have very little good companies (Italy, Germany, Austria, Ireland, Belgium)

That’s not completely right. For Australia, Canada and UK, the volatility plot is a parabola. I can find the vanguard paper where I saw similar plots if you’re interested.

What I’m thinking of doing, but been late, is actually looking at long-term holds from quality-focused managers and adding the odd stock here and there as you say. What’s held me back so far is that this is pure stock picking.

well, it worked for Warren Buffett :stuck_out_tongue:

Yeah, of course Buffett said “diversification is pointless, if you know what you’re doing”, pity is few people in history seem to “know what they’re doing” and I doubt I’m one of them :stuck_out_tongue:

I am holding Novo Nordisk from before it became all the rage, has worked out very well, I believe - and back up my belief due to my knowledge of pharma and medicine - that Novo will continue printing money for years to come. That’s what I mean by looking at long-term holds. Just need to dedicate more evenings to research…


Can you give some examples? I’d start with saying I am looking at ABB (CH) and holding Novo Nordisk (DK). But it’s a bold statement, there are many great companies in the Eurozone too.

A big miss from me. I wanted to buy it for a long time and it always just seemed that little bit too expensive. Then I took my eye off the ball.

NFA but personally I think it’s still ok.

It IS expensive, but they have first mover advantage in a YUGE (Donald Trump voice) market, and amazingly deep data to back it up. They (and others like Lilly and now Roche) are also looking at what’s possibly one of the last BIG hurrah’s for pharma - Alzheimer’s and NASH.

The last 12 months it’s been great data (medical data) coming out quarter after quarter, and the stock is doing a +10% every time. It jumped just yesterday after they released yet more great data: https://www.fiercebiotech.com/biotech/another-day-another-win-novo-obesity-early-oral-med-beats-wegovy

Again NFA, I just happen to work for pharma so have good conviction on this field.

What function is your employment in?

Consulting for pharma, are you in the field?

I work for Pharma but I’m in a finance field.

Quite sure Warren Buffet does not analyse past performance as base for knowing what he is doing…


My view is that in a global economy active management by over-weighting companies based on which stock exchange they happen to be listed is not likely to be a solid way to achieve out performance.

There might be other reasons for over weighting EU though. For example, tying your fortunes to those of the local economy.


why would one want to tie their fortunes to their local economy?
Sorry for the novice question.

If you lived in San Francisco since the 90s and didn’t buy shares of tech companies, rents have gone up by so much you might not be able to afford to live there today

I can’t think of a realistic scenario that would apply at Eurozone level. I was just trying to be polite and guess why you might want this overweight exposure !

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Probably several housing markets are the same.

Also currency, those who tied their mortgages to CHF loans while earning Euros didn’t fare too well.