vanguard total international and intl value?

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vanguard total international and intl value?

Postby alewisdvm » Wed Jan 30, 2013 8:56 pm

Hello,
I am 36 years old. Currently have a aggressive allocation.
goal for international exposure is 25%.
I use vanguard total international exclusively (and I believe has enough emerging markets already in it)

I was curious if there could be a slight advantage to maybe splitting this up to 15% total international and 10% international value?
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Re: vanguard total international and intl value?

Postby Beat The Street » Wed Jan 30, 2013 9:07 pm

The value premium exists in international stocks as well but the vanguard international value fund is actively managed. I use the Ishares msci eafe value etf, EFV. Either fund would probably be beneficial for a little value tilt.
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Re: vanguard total international and intl value?

Postby alewisdvm » Wed Jan 30, 2013 9:12 pm

Sorry, got a bit confused there.
Are you saying that the vanguard total international already has a good value tilt in it?
Or,
Are you saying that complementing it with the international value would be okay?
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Re: vanguard total international and intl value?

Postby Beat The Street » Wed Jan 30, 2013 9:26 pm

I don't know what the tilt is of vanguards international index but I would assume their intl. value fund is more valuey which should mean higher long term returns. But it is not an index fund it is actively managed which for most people on this board would mean its a no go. It has performed very well though. I do own an international value fund.
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Re: vanguard total international and intl value?

Postby nisiprius » Wed Jan 30, 2013 9:26 pm

alewisdvm wrote:Hello,
I am 36 years old. Currently have a aggressive allocation.
goal for international exposure is 25%.
I use vanguard total international exclusively (and I believe has enough emerging markets already in it)

I was curious if there could be a slight advantage to maybe splitting this up to 15% total international and 10% international value?
Have you looked up the basic description of this fund? This isn't a fund that gets discussed a lot in this forum. You haven't said why you think there might be a "slight advantage" to adding it.

Hopefully you are already aware that this is not a value INDEX fund. It does not mean "value" in the sense of "value tilt" or "Fama-French value factor."

It means "value" in the sense of stock-picking. In Vanguard's words, "This fund invests in non-U.S. companies from developed and emerging markets around the world that its advisors view as temporarily undervalued by the markets."

So, are you expecting some advantage in mixing an indexing approach with an active management approach? I personally think it's nonsense, but no less a luminary than Vanguard's Gus Sauter did write a paper, linked and discussed here, entitled "A framework for developing the appropriate mix of indexing and active management." The paper "explores how combining active and passive management results in more efficient portfolio construction."
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Re: vanguard total international and intl value?

Postby alewisdvm » Wed Jan 30, 2013 9:31 pm

I think I misinterpreted intent of the second fund.
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Re: vanguard total international and intl value?

Postby Elbowman » Wed Jan 30, 2013 10:09 pm

Plus, if you look at the morningstar style boxes for the vanguard international value fund you see that there is very little value tilt.
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Re: vanguard total international and intl value?

Postby SteelyEyed » Thu Jan 31, 2013 9:33 am

Make sure that you want a value tilt. If you do, then just use iShares' EFV. It is not perfect, but it is about as close as you'll get and is easily accessible. If you have access to it, then take a look at DFA's DFIVX. I don't have access to it, so I use EFV.
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Re: vanguard total international and intl value?

Postby YDNAL » Thu Jan 31, 2013 9:57 am

alewisdvm wrote:Hello,
I am 36 years old. Currently have a aggressive allocation.
goal for international exposure is 25%.
I use vanguard total international exclusively (and I believe has enough emerging markets already in it)

I was curious if there could be a slight advantage to maybe splitting this up to 15% total international and 10% international value?

First, if you use Int. Value you are just overweighing 191 Large Cap Stocks already in included Total Int'l (already Large-Cap weighted).
https://personal.vanguard.com/us/funds/ ... =INT#tab=2

Second, you will be better-served from a reward/risk perspective by adding/overweighing International Mid-Small VFSVX which includes 17% allocation to Canadian Mid-Small Stocks; and generally, all International Mid-Small Caps can be more representative of local economies from an economic diversification standpoint.
https://personal.vanguard.com/us/funds/ ... IntExt=INT
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Re: vanguard total international and intl value?

Postby alewisdvm » Thu Jan 31, 2013 10:08 am

Interesting suggestion.
My planned allocation (still making some adjustments) is about 25% total international and 15% small cap value, 10% vanguard REIT index, 15% vanguard total bonds (some have suggested 20%, but I am leaning just a bit towards 15% for a few more years), rest is in a 401k dryden s&P 500.

So, would it be wortwhile to try:
1. Reducing total international to 20% from 25%
2. Reducing small cap value to 10% from 15%
3. adding VFSVX at 10%
4. it was also suggested that I change small cap value to small cap index.

my previous thread with greater detail about my allocation is here:
viewtopic.php?f=1&t=109928
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