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Why are foreign companies, large or small, not allocated as international?

Jay Gourley

Is a data error or is there a design reason to report stocks like Volkswagen, Toyota, Yamana Gold, Vodaphone, SK Telecom, etc. as large or small cap stocks instead of international stocks in the Investing Allocation page?

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Accepted answers

Jay Gourley

Then this is a data mistake by the data supplier. A share of Toyota is a international stock if it's in mutual fund you own and it's a domestic stock if it's in your portfolio. From an asset allocation standpoint, there's no justification shown in this thread for that logic. But like Harman said, it's easy to reclassify the stock by editing its details.

And since it's not part of an ever-changing mutual fund portfolio there's no loss of allocation accuracy in doing so. You just have to remember to do it.

It's easy to see a complication in fixing the illogical allocation data since Quicken might be used in many countries and Toyota is an international stock if you're an American and a domestic stock of you're Japanese.

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Chris_QPW

Internation stocks doesn't refer to nationality of the company, it refers to where the security is exchanged.
For instance here is Toyota:

Image: https://us.v-cdn.net/6031128/uploads/editor/wl/nbrmekao9cgt.png

Given that Toyota is multinational company you can buy shares of their stock in the US.

Note that Quicken's quote services is only for US and Canadian exchanges, to about the only way you can get quote for "international stocks" is either they are in a US/Canadian mutual fund/ETF that buys them, or if you are buying them on different exchange through your broker and they are providing the pricing when downloading your transactions.

q_lurker

@Chris_QPW That is not really an accurate answer. Per Quicken's own definition, International Stocks are

"Publicly traded stocks of companies based in counties other than the US." There are many companies traded in the US through ADRs that get the asset Class within Quicken of International Stock - Astrazeneca, Bayer, BP, Ericsson Tel, and so on. So an "International Stock" within Quicken can certainly be traded on US (or Canadian) exchanges.

@Jay Gourley I suspect the answer to your question lies in the fact that only one asset class can be applied. Companies like Toyota, Vodaphone etc. tend to fall more conveniently in a Large Cap class than in the International class. Quicken's data supplier makes those calls (I don't think that is Morningstar, but I don't remember who it is), and I don't know what their criteria are. .

Jim_Harman

Also if you would prefer to classify them as International, you can disable asset class downloading for those securities and specify it yourself.

Chris_QPW

@q_lurker yes I forgot about ADRs, that would apply too.

In fact I don’t think there is a “right” answer for multinational stocks other than Large.

If the EU is tanking and people aren’t buying cars, but the US is booming is Toyota’s price going to go up or down, be flat?

When people talk about “being exposed to International securities” I think most people are talking about securities that are really influenced by what is going on in that part of the world.

So, yes I was wrong saying it has to do with the exchange, even though I think for smaller securities the exchange they trade on is a good indication of the market that most going to influence it the most.

After all the whole idea of these allocations is that different sectors will move differently and as such as a whole you will be better performance. If you set Toyota as International, it isn’t going to track the Japanese market.

Rocket J Squirrel

Jim_Harman said:

Also if you would prefer to classify them as International, you can disable asset class downloading for those securities and specify it yourself.

This. I have several funds (but not stocks) that I have reclassified to suit me. You don't have to obey Quicken's classifications if they don't work for you.

Jay Gourley

NotACPA

How do you know that the MF bought Toyota US and not Toyota Japan?

Jay Gourley

To NotAPA. If by "Toyota US," you mean the Toyota ADR, I don't think it matters. At least indirectly, either counts for an investment in a Japanese corporation. If you meant Toyota's US operations, I don't know what that corporate structure is, but if it's publicly traded separately from Toyota Japan, then I don't know anything about that.

Chris_QPW

For what it is worth I did look at what X-Ray Portfolio from MorningStar said about this, and does classify it as International, but I think @q_lurker is right the main problem is that you have to "pick one".

X-Ray Portfolio has both of these to work with:

Image: https://us.v-cdn.net/6031128/uploads/editor/10/ikrd46pima9c.png

q_lurker

I'm going to come back to @Jay Gourley's position that they picked wrong. Quicken's help on Asset Classes presents that Large and Small Cap asset classes are for US companies. On that basis, the breakdown should seen as US-Large Cap, US-Small Cap, and International. With that concept, Toyota and the others he cited and others I have seen should be International rather than Large Cap.

In the interest of having a diversified global investment portfolio rather than one too focused on US companies, I would consider it most valuable to have those international companies accurately represented.

I will add that in my own Quicken file, I have created Security Types for both US Equities and Int'l Equities (similarly US Mutual Funds and Int'l Mutual Funds) to more accurately address my needs in that direction. That approach is not beneficial for all users.

Chris_QPW

q_lurker said:

I'm going to come back to @Jay Gourley's position that they picked wrong. Quicken's help on Asset Classes presents that Large and Small Cap asset classes are for US companies. On that basis, the breakdown should seen as US-Large Cap, US-Small Cap, and International. With that concept, Toyota and the others he cited and others I have seen should be International rather than Large Cap.

I really need to look at Quicken's help more.

I absolutely agree based on it that this is wrong. Now how is Quicken Inc going to convince the third party to change it? That is the real big question.

Image: https://us.v-cdn.net/6031128/uploads/editor/nc/52dx6lwx8nwz.png

EDIT: I shouldn't have let my opinion the way the "risk" should be evaluated for the allocation get in the way it is actually classified.

q_lurker

FWIW: All in all, Quicken and its predecessor Intuit have always been pretty closed mouth about their data sources. Over the years, there has been substantial commentary on sources for Quicken's investment info. Names like Value Line and Morningstar have appeared, at times been acknowledged at least in part, and at times disavowed. They could be the sources for something like the MF asset allocation figures (with adaptation). WallStreetOnDemand was identified by "reliable sources" at one time. Then an outfit called Markit. Turns out Markit acquired WSOD. then merged with IHS in 2016 to become IHS Markit (a London England outfit). Then November 2020, S&P Global acquired IHS Markit. My bet would be they are still supplying data - either to Intuit or to Quicken, Inc. I also doubt we (the user base) will ever know for sure.

I would think the 15-min delayed stock pricing would be sourced more directly.

Seems to be right up their line to provide data in a form useful to their customer.