When you invest in the Iseq you invest in an index based on the market capitalization of IE equities. When you invest globally you can asset allocate based on international market capitalization. Just as the Iseq index is made up of the market weights of IE equities, the world market cap approach allocates by the relative weight of world stock markets. There is an index - the MSCI World - that follows this approach. The Iseq makes up less than 1% of world market cap index so unless you know something about the Iseq that nobody else does (e.g. you have a good reason to believe the Iseq is underweight in the index or you are super-patriotic), it’s difficult to see why anyone would want to invest more than 1% of their assets in the Iseq. Even if you restricted all your investment to eurozone equities, the Iseq makes up just 1.7% of the MSCI EMU Index. This implies that an investor who asset allocates on market cap would have a max of €1,700 exposure to the Iseq for every €100,000 invested. Based on the posts I’ve read on AAM, I’d say that the typical AAM investor has less than €100,000 in their portfolio (of course I might be wrong). If you had been unlucky enough to invest in the Iseq at its market peak you’ld now be down about 45 – 50%. So, if you had followed a rational asset allocation strategy you’d be down €850 max due to the Iseq for every €100,000 you’ve invested globally. Hardly worth losing sleep over.
