If I understand correctly, the sweet spot is around 30-40% (75 basis points), but likely 30% because it captures 84% of the maximum benefit (63 basis points) without incurring higher expense ratios, etc.
Assuming there is a sweet spot. The ideal allocation will vary depending on when you pick your starting and end dates for the analysis. This analysis is also from the perspective of somebody living and spending in USD.
True, the international stock fund is in many currencies. If the Euro is your future, you probably want more of a Euro centric fund, e.g. VGK, or a combination.
To quote my younger self:
But how much? And what is the best way to do that? I dunno.
Often times people make this currency commitment through real estate, e.g. buying a house. Or purchasing an annuity hedged for a specific currency. Or as we have been discussing, holding other assets (stocks, bonds) in the target currency.
But there is also location flexibility. If you are committed to life in Spain (for example) with family, kids in school, long term housing, etc... then you might make a stronger commitment than if you are ready to up and move to Vietnam if the Euro gets too expensive for awhile.
In our case, although we have essentially setup Taiwan as a home base, I have no intention of moving funds into TWD or transferring assets here. If things go crazy we'll leave.
re: passive investing
If you were following the index approach philosophy in it's purity, you would hold all assets at market weight. So you would hold roughly 50% of equities as International. It's possible to passively have home bias or passively have poor asset allocation.
re: our asset allocation
I think I pulled the 75/25 target for our US/Intl equities from this chart (or related)
https://www.bogleheads.org/wiki/File:US-International.png#filehistory