International Equities: ADRs, Funds, and the Foreign Tax Credit

The concentration problem in section “Don’t Mistake the Index for Diversification” has a mirror image: a portfolio built entirely from U.S.-listed names is a bet that one country’s market keeps outrunning the rest of the planet, which it has done for over a decade and will not do forever. International exposure is the standard hedge. The question is the wrapper, because the wrong one converts a sensible diversification move into a tax catastrophe.