Total World Stock Index

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sawhorse
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Total World Stock Index

Post by sawhorse »

Why is there so little discussion and recommendation of this fund? I didn't even know about it until last night, and not through this site.

On the surface, it looks like the perfect index fund. So why do people recommend separate Total Stock and Total International funds?
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retiredjg
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Re: Total World Stock Index

Post by retiredjg »

1) Many people want less than market weight of international.

2) The two funds separately are a little cheaper (unless things have changed).
Bfwolf
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Re: Total World Stock Index

Post by Bfwolf »

retiredjg wrote:1) Many people want less than market weight of international.

2) The two funds separately are a little cheaper (unless things have changed).
I agree these are the reasons. There's probably also an ancillary benefit of having more capital loss harvesting opportunities by keeping them separate.
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Re: Total World Stock Index

Post by lack_ey »

Also no admiral shares, so those who prefer the mutual fund version would pay an even greater amount in cost difference.

Code: Select all

------------ Fund expense ratios ------------
Fund           Investor    Admiral     ETF
US stock        0.17%       0.05%     0.05%
Intl. stock     0.22%       0.14%     0.14%
50/50 alloc.    0.195%      0.095%    0.095%
World stock     0.27%        N/A      0.17%
In addition, those who already owned the allocations separately would not want to pay capital gains taxes to sell and switch into a combined fund. Global cap-weighted stock funds are not popular options in 401k plans, so many people may have US/international stock splits they need to manage using separate funds if that's their aim. International investing started to become more mainstream in the 90s or so. Vanguard's international offerings started from 1996, and total world was introduced in 2008.
Last edited by lack_ey on Sun May 10, 2015 1:45 pm, edited 2 times in total.
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sawhorse
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Re: Total World Stock Index

Post by sawhorse »

Bfwolf wrote:
retiredjg wrote:1) Many people want less than market weight of international.

2) The two funds separately are a little cheaper (unless things have changed).
I agree these are the reasons. There's probably also an ancillary benefit of having more capital loss harvesting opportunities by keeping them separate.
It's 0.27 for Total World Stock, 0.22 for Total International, and 0.17 for Total Stock. Total World requires only $3000 while having both Total Stock and Total International requires $6000 for equal split, more if you want an unequal split. The slightly higher expense ratio seems like a fair trade off if there are no other disadvantages. But the fact that it gets so little mention makes me think there has to be something else, no?
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Re: Total World Stock Index

Post by lack_ey »

See above, was posting/editing around the time of your reply.
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HalfMillionaire
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Re: Total World Stock Index

Post by HalfMillionaire »

I have been advocating for it (not that I am any sort of expert - but I have voted with my pocketbook - I have VT in my portfolio). I think it is a very good option for a very long time horizon (for example - in a Roth IRA for a teen).
If we could get a Total World Bond, then we could just do a two fund portfolio and call it a day!
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Re: Total World Stock Index

Post by dh »

sawhorse wrote:
Bfwolf wrote:
retiredjg wrote:1) Many people want less than market weight of international.

2) The two funds separately are a little cheaper (unless things have changed).
I agree these are the reasons. There's probably also an ancillary benefit of having more capital loss harvesting opportunities by keeping them separate.
It's 0.27 for Total World Stock, 0.22 for Total International, and 0.17 for Total Stock. Total World requires only $3000 while having both Total Stock and Total International requires $6000 for equal split, more if you want an unequal split. The slightly higher expense ratio seems like a fair trade off if there are no other disadvantages. But the fact that it gets so little mention makes me think there has to be something else, no?
Starting with Total World Stock works when comparing the investor share class funds. However, when you get 20K in the Total World Stock you could split it 50/50 into the admiral shares for Total Stock and Total International (ER's 0.05 and 0.14 respectively). That would be an average expense ratio of 0.095 compared to 0.27. If Vanguard does introduce a Total World Stock Admiral shares class fund for 0.095, I would gladly switch and not have to be rebalance back to 50/50 each year.
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sawhorse
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Re: Total World Stock Index

Post by sawhorse »

I don't qualify for Admiral Shares, so that's irrelevant for me.

I want to make sure I have something straight. Total World Stock is just a combination of all the stocks in Total Stock and Total International, and they are weighted accordingly. Is that correct?
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Re: Total World Stock Index

Post by dh »

sawhorse wrote:I don't qualify for Admiral Shares, so that's irrelevant for me.
3K would get you in Total World and would provide the global diversity you desire. If you aren't going to keep adding to the account, perhaps the Total World ETF would work for you at a lower ER.

https://personal.vanguard.com/us/funds/ ... =INT#tab=2
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sawhorse
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Re: Total World Stock Index

Post by sawhorse »

dh wrote:3K would get you in Total World and would provide the global diversity you desire.
That's what I wanted to make sure of, that there is equal diversity. Like, all the stocks in Total Stock Market and Total International are also in Total World, correct?
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Re: Total World Stock Index

Post by dh »

Remember it isn't exactly 50/50 Total Stock / Total International, but pretty close. Click on the link I have in my previous post. You can see the exact portfolio breakdown and compare it to 50% Total US and 50% Total International.
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Re: Total World Stock Index

Post by FRANK2009 »

The Total World Fund owns a few thousand fewer companies than the combined Total World/Total International combination. I don't know whether the fewer number of stocks held will make much of a difference in returns either way.

Just be aware that the international allocation within the Total World fund is around 50%. Which is higher than many here are comfortable with. Be aware that unless something has changed, Vanguard recommends an upper limit of 40% for foreign holdings.

Disclosure: 90% of my equity holdings are in the Total World ETF. At some point I do plan to increase that to 100%. Seems the older I get, the simpler I want things to be.
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sawhorse
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Re: Total World Stock Index

Post by sawhorse »

FRANK2009 wrote:The Total World Fund owns a few thousand fewer companies than the combined Total World/Total International combination. I don't know whether the fewer number of stocks held will make much of a difference in returns either way.

Just be aware that the international allocation within the Total World fund is around 50%. Which is higher than many here are comfortable with. Be aware that unless something has changed, Vanguard recommends an upper limit of 40% for foreign holdings.
Do you know how they choose what stocks to exclude and why they exclude them?

Is the fund rebalanced to 50/50, or does that reflect the actual valuation of US stocks vs. non-US stocks in the index? And if the latter, do they exclude stocks in order to maintain that split?
Last edited by sawhorse on Sun May 10, 2015 2:38 pm, edited 1 time in total.
dh
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Re: Total World Stock Index

Post by dh »

FRANK2009 wrote:The Total World Fund owns a few thousand fewer companies than the combined Total World/Total International combination. I don't know whether the fewer number of stocks held will make much of a difference in returns either way.

Just be aware that the international allocation within the Total World fund is around 50%. Which is higher than many here are comfortable with. Be aware that unless something has changed, Vanguard recommends an upper limit of 40% for foreign holdings.

Disclosure: 90% of my equity holdings are in the Total World ETF. At some point I do plan to increase that to 100%. Seems the older I get, the simpler I want things to be.
Frank, I will probably change to the EFT at some point, unless Vanguard introduces a Total World Admiral Shares mutual fund and I exchange into that. Agree with you that simple is the way to go!
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Re: Total World Stock Index

Post by arcticpineapplecorp. »

The following figures are based on the last time I checked (it might be slightly different since then)...

First, the Total World Stock Market Index Fund contains more International stocks than U.S. at 55% international and 45% U.S., which may present more volatility than you want. Second, the Total World Stock Market Index Fund contains 5,371 stocks overall, which is less than the 9,142 stocks by holding both the Total U.S. and Total International Stock Market Index Funds combined. Third, the Total World Stock Market Index Fund has less emerging market stocks at only 8.6% of the fund versus 17.10% in the Total International Stock Market Index Fund. Finally, the Total World Stock Market Index Fund with Vanguard has an expense ratio of 0.35% per year, which is more than any allocation of Total U.S. and Total International Stock Market Index Funds together.

However, there's nothing at all wrong with this fund if you want a global stock index fund at low cost, diversified by size, style, sector, etc. in just one simple fund. Enjoy!
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Re: Total World Stock Index

Post by retiredjg »

I think the answer is yes and no.

None of these funds (Total World, Total Stock, or Total International) contain each and every stock that is listed in the index. Instead, an index fund will contain a representation of what is listed in the index.

So Total Stock might contain ABC stock and Total World may not have ABC stock but will have a similar stock instead of ABC stock.

Also, you need to understand that the ratio of US stock to foreign stock changes with time. A few years ago, the world contained about 42% US stock and 58% foreign stock. Right now, it's roughly half and half I think. Another time, it might be 56% US and 44% foreign (made up example).

So if you want half and half, you should not buy Total World because it will not always be half and half. If you want whatever the world happens to be at any one time, but Total World.

If you are buying this in a taxable account, I would not buy the fund that contains both asset classes because they will be married and you cannot sell one without selling the other.

Since you are talking about a $3k investment, just buy one or the other. It is not necessary to have both when you are starting out.
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Re: Total World Stock Index

Post by Erwin »

HalfMillionaire wrote:I have been advocating for it (not that I am any sort of expert - but I have voted with my pocketbook - I have VT in my portfolio). I think it is a very good option for a very long time horizon (for example - in a Roth IRA for a teen).
If we could get a Total World Bond, then we could just do a two fund portfolio and call it a day!
Currently and for a long time, my entire stock allocation is 90% in a Global Stock Index fund and 10% in an Emerging Markets Index fund. Currently I am seriously considering adding a small amount, maybe 10% of a SV index. No need to get unnecessarily complicated.
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sawhorse
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Re: Total World Stock Index

Post by sawhorse »

arcticpineapplecorp. wrote:The following figures are based on the last time I checked (it might be slightly different since then)...

First, the Total World Stock Market Index Fund contains more International stocks than U.S. at 55% international and 45% U.S., which may present more volatility than you want. Second, the Total World Stock Market Index Fund contains 5,371 stocks overall, which is less than the 9,142 stocks by holding both the Total U.S. and Total International Stock Market Index Funds combined. Third, the Total World Stock Market Index Fund has less emerging market stocks at only 8.6% of the fund versus 17.10% in the Total International Stock Market Index Fund. Finally, the Total World Stock Market Index Fund with Vanguard has an expense ratio of 0.35% per year, which is more than any allocation of Total U.S. and Total International Stock Market Index Funds together.

However, there's nothing at all wrong with this fund if you want a global stock index fund at low cost, diversified by size, style, sector, etc. in just one simple fund. Enjoy!
Thanks a lot! So the Total World only includes 60% of the stocks in the combined Total Market and Total International? That's a really big difference. How do they decide what stocks to exclude?

According to the Vanguard website, it's 55% North American and 9% emerging markets. I don't doubt that the figures you cite were true at some point, so this indicates that there have been some allocation shifts. Are these shifts intentional, or does it reflect shifts in actual stock valuation, perhaps due to the high dollar?

The expense ratio, according to Vanguard, is 0.27, not 0.35.

In terms of the risk, as I concluded from the responses in another thread (viewtopic.php?f=1&t=165243), the fixed income portion of my portfolio is so low-risk that I can afford to take higher risks with the stock portion if that will result in better long term returns.
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Re: Total World Stock Index

Post by lack_ey »

These are all cap-weighted index funds you're talking about. They're going to make a best effort at grabbing every company in the index in roughly the right proportions. Every major company in the index will be liquid and substantial enough for inclusion.

Some of the smaller stocks might be included in one index but not another, for various reasons. And a fund tracking the index may or may not bother with certain small companies not in the index. We have publicly listed companies in the US that are on regional exchanges that don't make the total stock funds, and some companies even on the major exchanges may be new IPOs or in some situation where they're not listed in the index. There are small companies all around the world that may be tricky or not worth putting in the index. There are countries with decently functioning stock markets that don't even get thrown into the international or global indexes (the so-called frontier markets). "Total" is an approximation. You're comparing different approximations with each other, so there are minor differences. But most of these involve the omission of companies that might be 0.001% of the fund if included, for example.

In any case, where there are differences and omissions, index funds will still try to grab the right proportion of securities to roughly have the right mix of sectors and countries represented.
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Re: Total World Stock Index

Post by sawhorse »

Thank you! What do you think about allocating my whole Vanguard Roth IRA, currently about $5400, to Total World Stock? Right now it's in Target 2045 which is 62.2% Total Stock Market, 27.6% Total International, and the rest a mix of US and international bonds. I can use TIAA Traditional in lieu of Total Bond, as suggested by others, but I don't have any international bonds, so I'd lose out on that.
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Re: Total World Stock Index

Post by PNW_Hunter »

I believe holding total stock market and total international stock market also gives you more individual holdings within the indexes over just total world.
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Re: Total World Stock Index

Post by nisiprius »

I think Total World Stock Index does in fact get a reasonable amount of attention in the forum, and the article on the Three-Fund Portfolio has a section, Combining domestic and international stocks, using Total World to create a two-fund portfolio.
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Re: Total World Stock Index

Post by bs010101 »

We used Total World in a new IRA from when we opened it with $3000 until it reached $20000, at which point we moved it to TSM and TISM Admiral Shares. Cost is the only reason for the move. I was happy it went down from 30 to 27 bps but still a lot more than the two Admiral funds.
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Re: Total World Stock Index

Post by lack_ey »

sawhorse wrote:Thank you! What do you think about allocating my whole Vanguard Roth IRA, currently about $5400, to Total World Stock? Right now it's in Target 2045 which is 62.2% Total Stock Market, 27.6% Total International, and the rest a mix of US and international bonds. I can use TIAA Traditional in lieu of Total Bond, as suggested by others, but I don't have any international bonds, so I'd lose out on that.
$540 of bonds and a moderate difference in US/international tilt really isn't all that much substantially different. Maybe just go with whichever way is easier to track.

You can also just buy the ETFs for total stock and total international.
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Re: Total World Stock Index

Post by asset_chaos »

You don't really have to guess at the current numbers for total world index fund or it's index the FTSE global all cap index. The Vanguard fund page is here https://personal.vanguard.com/us/funds/ ... IntExt=INT and the FTSE current fact sheet is here http://www.google.com.au/url?sa=t&rct=j ... 5102,d.dGY. FTSE says their global all cap index covers 98% of global market cap, which seems fairly total market to me. And the fund expense ratio has declined as assets in the fund have risen, which is what one expects from Vanguard. As an investor in total world fund since 2008, the fund has performed as I expected, and it tracks its index well. For what it's worth, I'm happy.
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Re: Total World Stock Index

Post by Majormajor78 »

sawhorse wrote: According to the Vanguard website, it's 55% North American and 9% emerging markets. I don't doubt that the figures you cite were true at some point, so this indicates that there have been some allocation shifts. Are these shifts intentional, or does it reflect shifts in actual stock valuation, perhaps due to the high dollar?
Remember that "North American" includes Canada which is about 8-9% of the global stock market I think. It always frustrated me that many sites including Vanguard and Morningstar would lump the two markets together like that.
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Re: Total World Stock Index

Post by sawhorse »

Majormajor78 wrote:Remember that "North American" includes Canada which is about 8-9% of the global stock market I think. It always frustrated me that many sites including Vanguard and Morningstar would lump the two markets together like that.
It's not a bad simplification when you look at the correlation between US and Canadian GDP: http://www.businessinsider.com/try-to-s ... gdp-2011-2

How much of the North American stock is Mexico, Caribbean, and Central America?
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Re: Total World Stock Index

Post by lack_ey »

8-9% is way too high for Canada.

By market cap they're about 3.4% of the world. Mexico somewhere around 0.5%. Everybody else in Central America and the Caribbean rounds to 0% combined (though keep in mind many of these countries don't make global indexes because they're below the 20-something developed markets and 20-something emerging markets and either aren't benchmarked, don't really have markets, and/or just fall into frontier markets). The US is more like 51% now.

This is based on fund pages and a quick spot check of indexes.

If you want to run the numbers yourself, the raw dollar capitalizations for more countries is available here, though a few years old:
https://www.quandl.com/collections/econ ... by-country

Or wait, here we go. FTSE's index (albeit not covering everything):
http://www.ftse.com/Analytics/FactSheet ... me=GEISLMS
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Re: Total World Stock Index

Post by TIAX »

retiredjg wrote:
None of these funds (Total World, Total Stock, or Total International) contain each and every stock that is listed in the index. Instead, an index fund will contain a representation of what is listed in the index.
I believe this is incorrect at least as to the Total International. The TSM prospectus states that the fund samples the index ("The Total Stock Market Index Fund is subject to index sampling risk, which is the chance that the securities selected for the Fund, in the aggregate, will not provide investment performance matching that of the Fund’s target index. "). The Total World prospectus also states that the fund samples its index. However, the TISM prospectus does not.
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Re: Total World Stock Index

Post by retiredjg »

Interesting.

However, I think it could still be sampling. In the prospectus for TISM on page 7, there is a discussion of indexing which states:
  • An index fund holds all, or a representative sample, of the securities that make up its target index.
Why they would use different terms or phrases in the different prospectuses is not clear to me but I just can't imagine that the TISM fund holds every stock on the index. Seems like that would be very costly.
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Re: Total World Stock Index

Post by TIAX »

retiredjg wrote:Interesting.

However, I think it could still be sampling. In the prospectus for TISM on page 7, there is a discussion of indexing which states:
  • An index fund holds all, or a representative sample, of the securities that make up its target index.
Why they would use different terms or phrases in the different prospectuses is not clear to me but I just can't imagine that the TISM fund holds every stock on the index. Seems like that would be very costly.
I believe that just explains how an index fund operates generally. That's in all index fund prospectuses.

In terms of it being costly, if you look at the Portfolio & Management tab of each fund, the number of securities in the fund is very close to the number in the index.
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Re: Total World Stock Index

Post by Rx 4 investing »

  • Sawhorse wrote: "Why is there so little discussion and recommendation of this fund? I didn't even know about it until last night, and not through this site. "
I agree, it's under-rated and not frequently recommended, but a good little fund for investors like me looking to simplify.

For whatever it's worth...

At the end of 2014, I finished my evaluation of my brokerage's "managed' account, and decided to go back to self-directed after mediocre results. I was looking to simplify, so I settled on a simple 50:50 "Harry Markowitz Portfolio" :

--50% Vanguard Total World Stock ETF (VT)

--50% Vanguard Total Bond Market ETF (BND).

Serenity now!

Why over-complicate? Use Occam's razor. From Wikipedia: " (also written as Ockham's razor and in Latin lex parsimoniae, which means 'law of parsimony') is a problem-solving principle devised by William of Ockham (c. 1287–1347), who was an English Franciscan friar and scholastic philosopher and theologian. The principle states that among competing hypotheses that predict equally well, the one with the fewest assumptions should be selected. Other, more complicated solutions may ultimately prove to provide better predictions, but—in the absence of differences in predictive ability—the fewer assumptions that are made, the better."
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Re: Total World Stock Index

Post by neurosphere »

Rx 4 investing wrote: At the end of 2014, I finished my evaluation of my brokerage's "managed' account, and decided to go back to self-directed after mediocre results. I was looking to simplify, so I settled on a simple 50:50 "Harry Markowitz Portfolio" :

--50% Vanguard Total World Stock ETF (VT)

--50% Vanguard Total Bond Market ETF (BND).
Suppose there is a late 20 something person who wants to begin saving for retirement but has zero knowledge of finance or investing. Also suppose, you convince him/her to invest in a 80/20 ratio of total world and total bond, and to also choose some sort of glide path between now and retirement.

Now, this Total World / Total Bond portfolio may not be the "best" portfolio or the most tax efficient portfolio, or the one with the lowest expense ratio. But surely it will beat the majority of the portfolios chosen by the "average" investor or "average" advisor, no? And, the simplicity of such a portfolio is very attractive.

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Re: Total World Stock Index

Post by retiredjg »

TIAX wrote:In terms of it being costly, if you look at the Portfolio & Management tab of each fund, the number of securities in the fund is very close to the number in the index.
I did look and found something interesting. Total Stock and Total International each contain a higher number of stocks than their indexes. :shock: But Total World does not.

I don't think any of this is particularly meaningful or important, but I did find it interesting.
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Re: Total World Stock Index

Post by abuss368 »

The investor can control their own allocations if they prefer something different from market weights.

Admiral shares are not available.

This funds has less diversification than the two individual funds.
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Re: Total World Stock Index

Post by Dandy »

I don't want or need that much international equity exposure. In theory, global exposure makes sense. The international equity risk seems greater and therefore the reward. I don't need or want that with 50% or so of my equity investments. I'm sure inertia, habit and a general resistance to adopt new investment ideas plays a part.

Also, increasing international exposure seems a bit trendy - where have all these people been the last 50 years? What has fundamentally changed? I've been in the financial services industry and have seen lots of trends and trendy products/concepts. Many were just ways of creating interest/commissions - need for advice/need to justify higher fees. I'm not saying the Vanguard World Stock Index fund was created for this purpose - just that it fits the trend of we should all have increasing International Stock exposure.

I've found the risk of adopting these investment trends is often greater than just keeping to your plan.
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Re: Total World Stock Index

Post by backpacker »

One word: Foreign Tax Credit. (Alright, that's three, but whose counting?) Foreign stocks go in your taxable account whenever possible. Domestic stocks go in your tax advantaged account whenever possible. A total world index forces you to put them in the same place.
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Re: Total World Stock Index

Post by pascalwager »

The Vanguard TSM and TISM funds include thousands of companies that are not included in TWS. That's one reason why I don't use the single fund.
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Re: Total World Stock Index

Post by Noobvestor »

Dandy wrote:Also, increasing international exposure seems a bit trendy
Funny, I've noticed the opposite the last few years - people saying they don't need international after US outperforms for a bit.
Dandy wrote:where have all these people been the last 50 years? What has fundamentally changed?
Pretty obvious, no? The introduction and growth of low-cost international index funds. Sure, when the 500 index fund from Vanguard was the only lost-cost option, it made sense. Then there was Total Stock, so why not diversify further? Then there was Total International, so why not diversify further? Someone in the 70s or 80s with few broad-market index options picked the broadest they could. Now we can index globally for tiny fractions of a percent more. That's the fundamental change. Where were they 50 years ago? Shoot, I don't even know, probably buying a basket of blue chips because there literally WERE no index funds.

My two cents: OK, sure, there are less stocks in Total World because of the indexes tracked for it, but if the price points were the same I'd still consider using the fund.
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Re: Total World Stock Index

Post by Erwin »

It seems to me that the slightly higher cost of the global fund more than compensate the fact that there is no need to do the necessary rebalance if owning the U.S. And foreign funds separately.
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Re: Total World Stock Index

Post by Dandy »

Pretty obvious, no? The introduction and growth of low-cost international index funds. Sure, when the 500 index fund from Vanguard was the only lost-cost option, it made sense. Then there was Total Stock, so why not diversify further? Then there was Total International, so why not diversify further? Someone in the 70s or 80s with few broad-market index options picked the broadest they could. Now we can index globally for tiny fractions of a percent more. That's the fundamental change. Where were they 50 years ago? Shoot, I don't even know, probably buying a basket of blue chips because there literally WERE no index funds.

Ok well maybe 50 years was a bit of a stretch.
I was in the mutual fund industry from the mid 80"s and there were international funds and lots of discussions about what allocations made sense. Don't recall any calling for world index model. International funds were more expensive but expense never held back allocation recommendations. The non US economies have grown relative to the US but I think that is only part of the story. That has been happening for quite awhile - but only recently has Vanguard upped the international exposure in equities and introduced international bonds. I am not aware of any breakthrough that would account for it.
VG Total Int. Stock has been around for about 20 years and only now we think it should be a larger part of Target Date and Life Strategy portfolios? International bonds have been around before US bonds or the US actually existed and only in 2013 was it a good idea to have an International bond fund -- and now it is an important part of these funds? Just seems very odd and I can't believe it all relates to lower costs.
lack_ey
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Re: Total World Stock Index

Post by lack_ey »

Dandy wrote:Pretty obvious, no? The introduction and growth of low-cost international index funds. Sure, when the 500 index fund from Vanguard was the only lost-cost option, it made sense. Then there was Total Stock, so why not diversify further? Then there was Total International, so why not diversify further? Someone in the 70s or 80s with few broad-market index options picked the broadest they could. Now we can index globally for tiny fractions of a percent more. That's the fundamental change. Where were they 50 years ago? Shoot, I don't even know, probably buying a basket of blue chips because there literally WERE no index funds.

Ok well maybe 50 years was a bit of a stretch.
I was in the mutual fund industry from the mid 80"s and there were international funds and lots of discussions about what allocations made sense. Don't recall any calling for world index model. International funds were more expensive but expense never held back allocation recommendations. The non US economies have grown relative to the US but I think that is only part of the story. That has been happening for quite awhile - but only recently has Vanguard upped the international exposure in equities and introduced international bonds. I am not aware of any breakthrough that would account for it.
VG Total Int. Stock has been around for about 20 years and only now we think it should be a larger part of Target Date and Life Strategy portfolios? International bonds have been around before US bonds or the US actually existed and only in 2013 was it a good idea to have an International bond fund -- and now it is an important part of these funds? Just seems very odd and I can't believe it all relates to lower costs.
Investment theory changes over time with more data and more people looking over the same data in new ways. There is more focus on cost now, for starters. As for some kind of world index, back then, there were much fewer readily investable ex-US stock markets, and the market caps and GDPs were different. There are reasons (some reasonable, some not as much) EAFE came first.

...or they're just trying to market time or think this is good for marketing and boosting sales.
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Noobvestor
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Re: Total World Stock Index

Post by Noobvestor »

I can't claim to know for certain, but I can see a lot of explanations, including the aforementioned research regarding the benefits of international investing. Certainly a question you could ask, though, at their live webinar later this month: viewtopic.php?f=10&t=165746&newpost=2492319

If I had to guess, I'd say Jack Bogle may have influenced them as well, both from his time at Vanguard and perhaps the legacy he left. Also possible they are now changing to try and keep up with the Joneses (or Fidelities, or T Rowe Prices or what have you). But really, costs have come down a lot, too, and I think that's a factor.

One thing I see as particularly positive about the change is that they are going against what recently did well. In past changes to Target Date funds they have done things that could arguably be construed as chasing winners - at least in this case the change comes after a period of international under-performance.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
dharrythomas
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Re: Total World Stock Index

Post by dharrythomas »

It's what we own in our taxable account. It's a great fund and has delivered as advertised.
Seattlenative
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Re: Total World Stock Index

Post by Seattlenative »

My wife and I have moved our IRAs and her 401(k) to TD Ameritrade. VT is offered commission free, as is VTI (U.S. Total Stock Index). I understand that U.S. stocks currently constitute a bit over 50% of Total World Stock Index.

We'd prefer simplicity in terms of having all of our international in a single fund, since VT is commission-free at TDA and VXUS is NOT commission-free at TDA (though VEU is). Rather than having a "two-fund portfolio" (VT and BND), I'm thinking that a three-fund portfolio using VTI, VT and BND (or AGG) might fill the bill for simplicity and diversification. With a classic 60/40 split between equity and fixed, I'm contemplating the following split:
40% BND (or AGG),
35% VT and
25% VTI.
Any thoughts on this?
Erwin
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Re: Total World Stock Index

Post by Erwin »

Seattlenative wrote:My wife and I have moved our IRAs and her 401(k) to TD Ameritrade. VT is offered commission free, as is VTI (U.S. Total Stock Index). I understand that U.S. stocks currently constitute a bit over 50% of Total World Stock Index.

We'd prefer simplicity in terms of having all of our international in a single fund, since VT is commission-free at TDA and VXUS is NOT commission-free at TDA (though VEU is). Rather than having a "two-fund portfolio" (VT and BND), I'm thinking that a three-fund portfolio using VTI, VT and BND (or AGG) might fill the bill for simplicity and diversification. With a classic 60/40 split between equity and fixed, I'm contemplating the following split:
40% BND (or AGG),
35% VT and
25% VTI.
Any thoughts on this?
Why add more U.S. Stocks via VTI? You are tilting towards the U.S. at the absolutely wrong time! VT is composed of three elements: US stocks, Developed World ex US stocks, and Emerging Markets. Any one of the last two is today a better purchase if you are taking a long term view and consider valuations, i.e., Shiller CAPE (PE10s)
Erwin
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retiredjg
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Re: Total World Stock Index

Post by retiredjg »

Seattlenative wrote: 40% BND (or AGG),
35% VT and
25% VTI.
Any thoughts on this?
I don't see a problem with it. If I did the math right, that puts international at 20% of the stocks. Is that what you intended?
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cfs
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Re: Total World Stock Index

Post by cfs »

One more time

Why Vanguard Founder Jack Bogle Doesn’t Like Investing in Foreign Markets

http://time.com/money/3991717/vanguard- ... ahoo_money
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CyberBob
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Re: Total World Stock Index

Post by CyberBob »

cfs wrote:One more time

Why Vanguard Founder Jack Bogle Doesn’t Like Investing in Foreign Markets

http://time.com/money/3991717/vanguard- ... ahoo_money
From the article:
  • he’s wary of Britain’s ‘unusual electoral process,’ Japan’s demographics, and France’s short workweek.
Since none of that is a secret, hasn't an efficient market already priced it in?
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