In early May, Old Mutual filed for approval from the SEC to launch its own exchange-traded funds through the Old Mutual Global Trust.

Apparently that approval was granted, because just the other day the firm filed a registration statement for five ETFs, all of them tracking indexes provided by the FTSE Group.

The list includes the following:

•Old Mutual FTSE All-World Fund
•Old Mutual FTSE Emerging Markets Fund
•Old Mutual FTSE All-Cap Asia Pacific ex Japan Fund
•Old Mutual FTSE All-World ex US Fund
•Old Mutual FTSE Developed Markets ex US Fund

Vanguard already offers ETFs tracking the FTSE All-World Index and the FTSE All-World ex.-US Index, so it will be interesting to see if newcomer Old Mutual will be able to beat Vanguard’s low fees — 30 basis points (0.30%) for the All-world fund and 25 (0.25%) for the All-world ex-US fund.

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We believe that the starting point for evaluating the allocation weight to be given US equities within the overall equity allocation in a portfolio should begin from the world weight of US equities.

It may well be that US equities should be overweighted or underweighted for any number of reasons, but we believe the world weight is the appropriate starting point.  It’s a bit like “zero based budgeting”.

We believe it is inappropriate to begin with old rules of thumb such as “80% to 90% US and up to 10% to 20% in foreign equities”.  At best, such rules were formed a long time ago, before the extensive globalization of commerce we have today. At worst, they were just narrow insular thinking.   You can arrive at an 80% US allocation, but you should not start at an 80% US allocation.

Currency Issues:

We are not overly concerned about the currency risk argument often posed

We believe that the equity allocation, large or small, of portfolio should reflect the global pattern of business development, following global growth and profits fundamentals.

Investing with a home country bias may be emotionally comforting, but it is becoming increasingly suboptimal.

We have written repeatedly that the tendency to massively overweight home country positions with a toe or a foot in other parts of the world fails to participate fully in world growth and opportunity.

A total world fund such as Vanguard’s Total World Stock ETF (symbol VT) based on the FTSE All-World Index is a good option to consider for those seeking simplicity in their portfolios, or as a core position to be supplemented by more specialized funds. Access fund webpage.

The Index includes approximately 2,900 stocks of companies located in 47 countries, including both developed and emerging markets. The fund holds 1,737 stocks and carries a 25 basis point expense