Emerging Markets--too little of it!!!

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

Emerging Markets--too little of it!!!

Postby birdy » Sun Dec 30, 2012 7:17 pm

I am reviewing my asset classes and discovered I have too much Europe stock (53% of my International stock) and too little of emerging markets (13.2%). I know that my VGTSX has some emerging stock but could not find the % in the fund currently. I sent a e-mail to Vanguard to ask them what the % in emerging is. Currently, I have 16% of my stock mutual funds in International. I don't know if I should just add more to the VG Total International Stock Index fund, or go with an emerging market mutual fund like DFCEX Emerging Mkts Core Equity or Wisdom Tree Emerging Mkts Equity, or even VG Emerging Mkts. Any one have any suggestions?

Thanks, birdy

I am 58 years old and other than the above am well diversified in everything else.
Last edited by birdy on Sun Dec 30, 2012 7:21 pm, edited 1 time in total.
birdy
 
Posts: 157
Joined: 2 May 2010

Re: Emerging Markets--too little of it!!!

Postby Aptenodytes » Sun Dec 30, 2012 7:21 pm

You are close enough, especially with such a low international allocation.
User avatar
Aptenodytes
 
Posts: 1756
Joined: 8 Feb 2011

Re: Emerging Markets--too little of it!!!

Postby birdy » Sun Dec 30, 2012 7:26 pm

Thanks, Aptenodytes. I was going to increase my overall allocation in International as I know it is a little low anyway. I was just going to increase it if I could with more emerging markets.

birdy
birdy
 
Posts: 157
Joined: 2 May 2010

Re: Emerging Markets--too little of it!!!

Postby Aptenodytes » Sun Dec 30, 2012 7:30 pm

Go for it if you want, and but I don't see the evidence for it. I go for market weights geographically though I tilt small and value both domestically and abroad.
User avatar
Aptenodytes
 
Posts: 1756
Joined: 8 Feb 2011

Re: Emerging Markets--too little of it!!!

Postby birdy » Sun Dec 30, 2012 7:38 pm

Aptenodytes:

I was going to increase my Emerging Mkts to 24% within my International funds. I also have looked at DEMSX Emerging Mkts Small Cap fund as I also tilt small cap in my domestic funds.
birdy
 
Posts: 157
Joined: 2 May 2010

Re: Emerging Markets--too little of it!!!

Postby livesoft » Sun Dec 30, 2012 7:41 pm

Do not forget that different places have different definitions for what is considered emerging markets. One might want to factor that in.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 30760
Joined: 1 Mar 2007

Re: Emerging Markets--too little of it!!!

Postby asset_chaos » Sun Dec 30, 2012 8:53 pm

If you have all your international stock investment in total international fund, then you have the market weight of emerging countries as a fraction of your chosen allocation to all non-US stock capitalization. Emerging markets are about a quarter of all non-US markets and Europe is less than but not too far off half. The exact fractions could depend on if you count eastern europe as europe or as emerging. Based on your numbers---a little heavy on Europe and a little light on Emerging---does this mean you have overweighted Europe in the past? Or have you sliced international into Europe, Pacific and Emerging market index funds and now need to rebalance because European stocks have done well this year? If you need to rebalance, then do it. If you want to ensure you're always close to market weight within your international allocation without the need for your personal attention, then you might consider simplifying everything into total international.

Happy New Year
Regards, | | Guy
asset_chaos
 
Posts: 789
Joined: 27 Feb 2007
Location: Melbourne

Re: Emerging Markets--too little of it!!!

Postby rkhusky » Mon Dec 31, 2012 12:50 am

birdy wrote:I am reviewing my asset classes and discovered I have too much Europe stock (53% of my International stock) and too little of emerging markets (13.2%). I know that my VGTSX has some emerging stock but could not find the % in the fund currently. I sent a e-mail to Vanguard to ask them what the % in emerging is. Currently, I have 16% of my stock mutual funds in International. I don't know if I should just add more to the VG Total International Stock Index fund, or go with an emerging market mutual fund like DFCEX Emerging Mkts Core Equity or Wisdom Tree Emerging Mkts Equity, or even VG Emerging Mkts. Any one have any suggestions?

Thanks, birdy

I am 58 years old and other than the above am well diversified in everything else.


I am surprised that you could not find the amount of emerging markets in VGTSX. The overview page on Vanguard's web site says 23.4% as of 11/30/12.
rkhusky
 
Posts: 1350
Joined: 18 Aug 2011

Re: Emerging Markets--too little of it!!!

Postby birdy » Mon Dec 31, 2012 8:38 am

Thanks, asset_chaos and rkhusky:
I have a 401K that I have RERGX American Funds Europacific and TIVRX Thornburg International Value. My % of Foreign includes these two funds also. These two funds have both done ok (I don't like their expense ratio though!) so I was going to keep them for the time being. Thank you for the % of emerging on VGTSX--I some how missed seeing it!

birdy
birdy
 
Posts: 157
Joined: 2 May 2010

How much International and Emerging Markets Exposure?

Postby EDN » Mon Dec 31, 2012 12:34 pm

In general, I find that about 30% in non-US stocks is about right to get the full diversification benefit of international investing (lower risk, higher returns than US-only allocation). "Just" also helps behaviorally as it can be tough for many investors to hold significant non-US allocations during periods when our domestic market is doing well comparatively. If one lived in Canada or Australia where their home market was a very small percentage of the world market (<10%), it might make sense to up that to 50%, but for US investors I don't think its necessary. Further, don't forget that your future liabilities will be tied to the US economy and US $s, so that is another reason to hold a high % of US stocks.

Within the international allocation, I've found that about 2/3 developed and 1/3 emerging is a good split. EM is higher risk (and higher expected return), but offers a bit more diversification than non-US developed.

If I were using Vanguard funds, I'd stick with Vanguard Int'l Value, Vanguard Int'l Explorer, and Vanguard Emerging Markets Index (3x33). Another variation would be 17% Vanguard Int'l Value, 67% Vanguard World exUS Small Cap Index, 17% Vanguard Emerging Market Index. Those wanting exclusively index funds can replace VTRIX with iShares EAFE Value in either case. You also get a bit better diversification benefits by holding non-US small and value stocks as opposed to non-US market portfolios like EAFE. In doing so, you don't need as much Int'l % to get the overall benefit.
EDN
 
Posts: 528
Joined: 29 Dec 2012
Location: Oklahoma City, OK

Re: Emerging Markets--too little of it!!!

Postby birdy » Tue Jan 01, 2013 1:30 am

Thanks EDN:
I have 58% Stocks (82% US, 17% International)
18% Bond funds (Intermed-term, Total Bond Mkt)
24% Short term ( 5 year CD ladder, EE Bonds, MMkts, ect.)
I have been wanting to increase my International exposure up to the recommended 20-30%. Your suggestions/thoughts are greatly appreciated! I have a clearer picture of what I will do now with our Roth money for 2013. Thank you so much.

birdy
birdy
 
Posts: 157
Joined: 2 May 2010

Re: Emerging Markets--too little of it!!!

Postby BHCadet » Tue Jan 01, 2013 1:47 am

birdy wrote:I know that my VGTSX has some emerging stock but could not find the % in the fund currently..

I've Vanguard Total Intl Stock Index Fund Admiral Shares (VTIAX).
The followings are the international regions according to Vanguard:
developed European countries - 44.00%
developed Pacific countries - 23.70%
Canada - 8.30%
emerging market countries - 23.40%
Uncategorized - 0.60%
User avatar
BHCadet
 
Posts: 344
Joined: 15 Jan 2012
Location: Southern California

Re: Emerging Markets--too little of it!!!

Postby birdy » Tue Jan 01, 2013 2:04 am

Thanks BHCadet for the additional info on VGTSX/VTIAX. That explains alot when I add all my international together!

birdy
birdy
 
Posts: 157
Joined: 2 May 2010

Re: Emerging Markets--too little of it!!!

Postby beardsworth » Tue Jan 01, 2013 4:36 am

birdy (original poster) wrote:I know that my VGTSX has some emerging stock but could not find the % in the fund currently.


This kind of information is generally found under the "Portfolio & Management" tab on the page for any individual Vanguard fund. As of this writing, the most recent information displayed for Total International Stock is still as of 11-30-12. Note the "emerging markets" percentage in the color-coded "allocation" pie chart here:

https://personal.vanguard.com/us/funds/ ... =INT#tab=2
beardsworth
 
Posts: 1521
Joined: 15 Jun 2007

Re: Emerging Markets--too little of it!!!

Postby The Wizard » Tue Jan 01, 2013 10:52 am

Careful, since Emerging Markets are outperforming a bit the past few months. So make sure you're not chasing past performance at this point...
The Wizard
 
Posts: 5533
Joined: 23 Mar 2010
Location: Reading, MA

Re: Emerging Markets--too little of it!!!

Postby birdy » Tue Jan 01, 2013 12:12 pm

Thanks MarcMyWord for the link. I figured out why I was having difficulty getting the info --my computer is not displaying the charts because something is wrong with my Micromedia Flash. I will get my computer wiz (husband) to fix it for me!
The wizard--I am not chasing gains. Every year at this time when I am deciding what to do with Roth money, I go over my/our allocations and determine where best to put the new retirement money. This is just my normal yearly "check under the hood" to make sure my 60/40 is correctly allocated (or rebalancing as some put it). As I was down sized/laid off in March (2012) I have had no 401K to add to. I have been able to find small jobs to the tune of about 20 hrs per week since then but my Roth money is much more "valuable" to me now since I can't get the pretax benefits of the 401K right now.

birdy
birdy
 
Posts: 157
Joined: 2 May 2010


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: adptnt, asif408, Baidu [Spider], Bing [Bot], InvestorNewb, jayhawk20, jdb, mrehal, tipswatcher, zed and 47 guests