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Okay, this has been bugging me for a while, and I just need some feedback. I am a Boglehead to the core and my portfolio is currently 90% index funds. However, I am having difficulty determining why I shouldn't exchange my VGTSX index fund for DODFX (Dodge & Cox Int'l) in my Roth account.
Of course the tax consequences are irrelevant for the Roth, so here is a before-tax performance comparison:
1-year 21.03% 18.14%
3-year 4.96% 3.90%
5-year -1.89% -3.03%
10-year 11.63% 9.41%
True the ER for DODFX is .60%, but why should I care if it is performing better? Can somebody please talk me out of this?
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Dodge & Cox International Stock DODFX is a good moderate cost managed fund, and I often suggest it where offered in a 401k for people who do not have a good international index fund offered in their 401k.
You know the history of the growth of the two funds over the last 10 years. There is no telling which will be better in the next 10, 20, 30 years, but the more reasonable bet would be a well diversified international index fund with an expense ratio that is 0.42% lower (0.64% - 0.22%)
"Everything should be as simple as it is, but not simpler." - Albert Einstein
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Is this an 'either or' situation? If you can hold both, why don't you split the investment between the two.
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- Joined: 31 Dec 2012
So do chasing performance and reversion-to-the-mean mean anything to you?
Personally, I'd be buying the index fund especially if it appeared to perform worse over the short-term.
Also note that DODFX had plenty of emerging markets years ago before VGTSX had any emerging markets, so it is not an apples-to-apples comparison.
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.
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