Help with my Intl allocation

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Topic Author
AZK
Posts: 52
Joined: Tue Dec 07, 2010 9:49 am

Help with my Intl allocation

Post by AZK »

I currently hold 50/50 US/Intl for the stock portion of my portfolio with my Intl portfolio split 25% developed/15% emerging...

I think I am going to change the INTL to 50/50 between developed/emerging, but this is neither here nor there.

The developed is split evenly between EFA, EWJ, EPP.

My emerging is all EEM, bought several years ago, before i was aware of VWO.

I'd like to TLH EFA and EWJ which are down, but EPP is up...so what would be a suitable ETF to replace EFA/EWJ, I was thinking VEA, didn't look like there was an option for japan but VEA is 22% japan I believe...

Ultimately, I don't think I really need 3 different ETFs to reflect my developed intl, so I was thinking about ultimately switching to a vanguard ETF that could mirror all 3 - VEU.

Thoughts on this? I would sell all 3 and just buy VEU, but the EPP performance would negate my TLH...

Thanks.
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Post by livesoft »

What are you gonna do owning all these? Do you regularly rebalance among them? The year 2010 was an exceptional year for rebalancing. How many times did you fall outside your rebalancing ranges this year and actually rebalance?

If your answer is "I didn't think to make any changes in 2010 until now", then you should probably just purchase VEU and VSS or wait and purchase the new Vanguard Total Int'l Index ETF. Note that VEU, VSS and the new etf all contain emerging markets as well as developed markets.

You can still overweight emerging markets when holding VEU+VSS, but you have to buy VWO + EWX|DGS.
Topic Author
AZK
Posts: 52
Joined: Tue Dec 07, 2010 9:49 am

Post by AZK »

That was sort of what I was thinking. I don't rebalance frequently. Once a year, maybe twice, tops.

So I'd like to simplify things... What's the simplest way to get 50/50 Developed/Emerging with good exposure to all countries?

If I understand what you are saying, then a good way to get a 50/50 small cap/large cap in developed intl would be 50/50 VEU/VSS, right?

Do I need to buy other emerging other than VWO?

Why can't I have

50%
-25% VEU
-25% VSS

50% VWO


Thanks.

Edit: It appears that VEU has some EM in it, so maybe keep my 25%/15% developed/emerging, but use VEU in my developed so it ends up being closer to 50/50...
Topic Author
AZK
Posts: 52
Joined: Tue Dec 07, 2010 9:49 am

Post by AZK »

I did a little more digging, and it looks like both VEU and VSS are ~25% emerging market...if that is the case, and I'm looking for 50/50 developed/emerging is this too much weight when including VWO?

For recap:

I have 35% International equity...I was planning on splitting it

10% VEU
10% VSS
15% VWO


Thanks.
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midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

my plans include

Post by midareff »

of total portfolio a 12% allocation to VTIAX, another 5% to VEMAX and 5% to VINEX.

Just my 2 cents.

M
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Post by livesoft »

You will just have to find the linear combination of those funds that gives you what you want. You can simply do trial and error with Morningstar's Instant X-ray tool to arrive at the answer. When you get it, please report it here with the 9-grid style box. Thanks!
natureexplorer
Posts: 4207
Joined: Thu Sep 03, 2009 10:52 am
Location: Houston

Post by natureexplorer »

Is this in a taxable account?

What is EPP? What percentage of your portfolio is it?
Topic Author
AZK
Posts: 52
Joined: Tue Dec 07, 2010 9:49 am

Post by AZK »

Livesoft -

Yeah, it's splitting hairs, but I think VEA/VSS/VWO would be more diverse and less weight on emerging markets than VEU/VSS/VWO...since I already own a healthy chunk of VWO I'll likely buy up VEA/VSS for my developed portion. I don't really want more than 15% of my portfolio to be emerging markets (i think...based on everything I've read)

Here are the following grids:

Original allocation (EFA/EPP/EWJ/EEM)

U.S. & Canada 0.06
Europe 12.82
Japan 25.12
Latin America 9.12
Asia & Australia 45.56
Other 7.32
Not Classified 0.0

33 28 27
5 4 3
0 0 0

Seems a bit lopsided when compared to below....

VEU/VSS/VWO

U.S. & Canada 5.93
Europe 23.92
Japan 6.88
Latin America 13.08
Asia & Australia 39.78
Other 10.41
Not Classified 0.00

24 18 21
10 8 8
5 3 2

VEA/VSS/VWO

U.S. & Canada 4.15
Europe 29.87
Japan 9.15
Latin America 11.30
Asia & Australia 36.36
Other 9.16
Not Classified 0.00

24 18 21
10 8 8
5 3 2

VTIAX/VEMAX/VINEX (according to midareff %s, i'd need to adjust for my 35% total allocation)

U.S. & Canada 0.27
Europe 38.49
Japan 12.62
Latin America 9.59
Asia & Australia 31.69
Other 7.34
Not Classified 0.00

27 20 23
8 7 6
4 3 3

Midareff -

Interesting suggestions. Seems more weighted towards large cap, not sure if I'm ready to switch to MF, especially since I'm not as familiar with the vanguard MF as I am with various ETFs, I'd have to look at these 3 and see how they compare to the ETFs... obviously the emerging market is equivalent, but I'm not as familar with VINEX

Is there a big difference between VEA/VSS/VWO vs. what you recommended?


natureexplorer -

This is an all taxable account. I have all of my equity in taxable and all my bonds in IRA/403b. This is the first year I was able to contribute towards an IRA/403b so just started using all that tax-deferred space for bonds...

EPP was an ishares ETF that was pacific except japan.... prior to switching to vanguard funds I had my intl equity split evenly among EFA/EPP/EWJ - europe/pacific/japan in equal %s... then had a separate ishare (EEM) for my developed portion....since registering on this forum i've been trying to simplify my portfolio...hence all the switches....

Appreciate everyone's thoughts.
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