Your U.S. equity fund is more global than you think

Where a company is listed doesn’t always indicate where its assets are

Gabrielle Dibenedetto 21 March, 2019 | 2:00PM
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Just how “made in America” are U.S. stock funds? It turns out there’s not as much as apple pie and baseball in some of those portfolios as investors might think.

When it comes to assessing the asset-allocation characteristics of a mutual fund, some information, such as market capitalization, isn’t difficult to measure. But when it comes to geographical allocations, investors have been depending on a potentially flawed approach, such as relying on where a company is headquartered or incorporated or where the stock is listed.

With the aim of producing a more accurate picture of a portfolio’s geographic allocation, Morningstar has rolled out proprietary global geographic segment data that enables investors to assess a fund’s geographic exposure based on the revenues streams of the companies it holds.

In this article, we dive into five of the most popular U.S. index-tracking exchange-traded funds with the goal of highlighting the differences between basing asset allocation on revenue exposure by region data versus “business country” factors such as where a company is headquartered.


We’ll start off with SPDR S&P 500 ETF (SPY), which has a Morningstar Analyst Rating of Gold. The S&P 500 is the most widely followed U.S. equity benchmark, and the fund’s portfolio has essentially all of its assets listed with the United States as its business country. But when viewed through the prism of revenue by region, the map looks decidedly different.

Source: Morningstar

Only 62.5% of revenue from the companies in SPY originates in the United States. SPY has about 10.0% of revenue generated from Asia-emerging markets, which include mainland China and India. Another 8.8% comes from eurozone countries.

Source: Morningstar

With SPY, three of the top five holdings are tech stocks: Microsoft (MSFT), Apple (AAPL), and Facebook (FB). Taken together, these firms are main drivers of the fund’s eurozone and Asia-emerging exposure.

Source: Morningstar

That said, there are still plenty of U.S.-based holdings in SPY that have revenue streams mainly in the United States, such as the fourth-largest holding, Berkshire Hathaway (BRK.B), with 87.1% of revenue based domestically. The 16th-largest position as of Feb. 27, UnitedHealth Group (UNH), has 96% of its revenue from the United States.


Gold-rated Vanguard Total Stock Market ETF (VTI) posts similar revenue-by-region metrics. The fund tracks the CRSP U.S. Total Market Index and, like the S&P 500, is market-cap-weighted. Similar to SPY, VTI’s top holdings include Microsoft, (AMZN), Apple, and Facebook. Again, those names are significant contributors to the fund’s revenue base in Asia-emerging and eurozone countries.

Source: Morningstar

Although revenues in financial-services companies are primarily produced domestically, Citigroup (C) and Goldman Sachs Group (GS) buck that trend.

Citi, while headquartered in the U.S., only has about half of revenue generated domestically at 47.9%, Japan contributes 20.2%, and Latin America 13.3%. Goldman similarly has 45.4% of revenue from the U.S., with 15% coming from Australasia, eurozone 12%, and Latin America 11%.


With the Neutral-rated Invesco QQQ Trust (QQQ) tracking the Nasdaq 100 Index and its major weightings in large multinational technology companies, the ETF barely cracks the 50% mark in revenue from the United States.

Source: Morningstar

Although QQQ’s top holdings are the same as SPY and VTI--Microsoft, Apple, Amazon, and Facebook--this fund is more concentrated among those stocks. The fund has about 33.3% of assets in these four holdings, while they comprise only about one-tenth of the assets in SPY and VTI.

Another top QQQ holding, at 1.4% of assets as of Feb. 27, is Broadcom (AVGO), which gets only 7.2% of its revenue from the U.S. but generates 57.2% from Asia-emerging countries and 11.4% from eurozone countries. Booking Holdings (BKNG), while the 19th-largest holding in the fund, is a major source of QQQ’s eurozone revenue base. Nearly 78% of Booking’s revenue is generated in the region.

Source: Morningstar

Other large multinational tech positions include Intel (INTC) with 20% of revenue from the U.S., 40.9% in Asia-developed, and 24.6% in Asia-emerging countries. Adobe (ADBE) has about half its revenue from the U.S., while 13.3% comes from the eurozone and 7.2% from Japan.


For Gold-rated Vanguard Dividend Appreciation ETF (VIG), the largest holdings are in the consumer products and retail sectors. Some of these companies primarily generate revenue in the U.S. They include Walmart (WMT) and Costco Wholesale Corp (COST), which respectively generate 76.1% and 72.2% of revenue domestically.

Source: Morningstar

Still others have larger overseas sales, such as McDonald's (MCD), with only 35.1% of revenue in the U.S. but 22.3% in eurozone and 16.3% in Asia-emerging countries. Nike (NKE) pulls 37.4% of revenue from the U.S., 21.3% from Asia-emerging, and 13.4% from eurozone countries. 3M (MMM) generates strong shares of revenue across eurozone, Asia-emerging, Japan, and Latin American countries.


Investors tend to view the Russell 2000 as the broad market benchmark most closely linked to the U.S. economy. While that’s true compared with the other indexes in this article, Bronze-rated iShares Russell 2000 ETF (IWM) still barely tops the three-fourths mark when it comes to U.S. revenue exposure.

Source: Morningstar

Individual positions in IWM are small, with the largest holding accounting for only 0.41% of total assets. Therefore, the revenue exposure picture isn’t as tilted by individual names as the other funds.

Still, IWM’s two largest holdings are domestic retailers, Five Below (FIVE) and Etsy (ETSY), which have 100% and 72%, respectively, of revenue generated in the U.S. Another top holding is Planet Fitness (PLNT) with 98.4%. But then there is Integrated Device Technology (IDTI), which only has 8.4% of revenue generated in the U.S., while 46.8% is from Asia-developed countries and 21.1% from Asia-emerging countries.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
3M Co100.90 USD-0.63Rating Inc183.66 USD-0.09Rating
Apple Inc212.49 USD-0.82Rating
Berkshire Hathaway Inc Class B405.54 USD-0.09Rating
Booking Holdings Inc3,859.10 USD0.08Rating
Broadcom Inc1,735.04 USD3.34Rating
Citigroup Inc59.33 USD-1.49Rating
Costco Wholesale Corp855.67 USD1.15Rating
Etsy Inc58.87 USD-2.11Rating
Five Below Inc112.88 USD-0.76
Intel Corp30.45 USD-0.03Rating
McDonald's Corp253.58 USD-0.05Rating
Meta Platforms Inc Class A504.16 USD0.01Rating
Microsoft Corp442.57 USD0.22Rating
Nike Inc Class B93.39 USD-0.84Rating
Planet Fitness Inc Class A71.15 USD-1.86
The Goldman Sachs Group Inc446.46 USD0.02Rating
UnitedHealth Group Inc497.12 USD-0.04Rating
Walmart Inc67.02 USD0.48Rating

About Author

Gabrielle Dibenedetto

Gabrielle Dibenedetto  Gabrielle DiBenedetto is a data journalist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She works to tell stories and create visualizations using Morningstar’s broad spectrum of data and research. Before assuming her current role in 2018, DiBenedetto was a client-services representative for the Morningstar Direct and Morningstar Office platforms. Prior to that, she interned at Boston Magazine, covering startup companies and venture capital. She also interned on the business desk at the Wisconsin State Journal, covering local business development. DiBenedetto holds a bachelor’s degree in journalism and economics from the University of Wisconsin-Madison.

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