The Global Capital Stock: Finding a Proxy for the Unobservable Global Market Portfolio

Abstract

Thirty-five years after the World Market Wealth Portfolio of Ibbotson and Siegel [1983], this article summarizes the authors’ attempt to measure the stock of a broad universe of assets worldwide. Therefore, by measuring the global capital stock of assets (both financial and nonfinancial) in the economy, the authors intend to provide a proxy for the theoretical global market portfolio. The authors compute the market value of global assets included in 11 asset classes for the 2005–2016 period. Despite the limited availability of data for nonfinancial assets, the authors argue that their proxy for the global market portfolio is a much-needed starting point for those willing to diversify away from traditional domestic portfolios and achieve global asset class diversification.