under performance of EM vs US

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under performance of EM vs US

Postby rm » Sat Mar 09, 2013 12:18 pm

Has anyone else noted how poorly EM (VWO) has performed compared to DIA in the past 1yr, 3yr time-frame. The last time I remember EM performing so poorly, they came roaring back. Similar thing is noticed for VSS vs US small cap. I can't find a good vehicle for EM small cap (apart from DFA which I don't have access to)

I am looking to invest some new cash into my taxable and I am leaning towards over-weighting VWO, VSS over SPY. I see myself being underweight right now in the EM (primarily because US markets have done so well lately). Isn't the risk-reward of EM still holding true?
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Re: under performance of EM vs US

Postby Johm221122 » Tue Mar 12, 2013 2:43 am

It sounds like an investment plan would help you
http://www.bogleheads.org/wiki/Investme ... _Statement
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Re: under performance of EM vs US

Postby YDNAL » Tue Mar 12, 2013 7:18 am

rm wrote:Has anyone else noted how poorly EM (VWO) has performed compared to DIA in the past 1yr, 3yr time-frame. The last time I remember EM performing so poorly, they came roaring back. Similar thing is noticed for VSS vs US small cap. I can't find a good vehicle for EM small cap (apart from DFA which I don't have access to)

I am looking to invest some new cash into my taxable and I am leaning towards over-weighting VWO, VSS over SPY. I see myself being underweight right now in the EM (primarily because US markets have done so well lately). Isn't the risk-reward of EM still holding true?

Is that the same EM and SPY here?

    Extended Mkt Index Inv VEXMX
    1 year 14.04%
    3 year 15.60%
    5 year 7.57%
    10 year 11.96%
    Since 12/21/87 10.54%

    SPY (NAV)
    1 year 15.97
    3 year 12.86
    5 year 5.60
    10 year 8.96
    15 year 4.33
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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Re: under performance of EM vs US

Postby czeckers » Tue Mar 12, 2013 7:41 am

I think EM might me emerging markets.

Have a plan with a set asset allocation strategy. When the percentages drift out of proportion, buy/sell to reballance back to the original allocation. Without a plan it's hard to make these decisions.

-K
The Espresso portfolio: | | 16% LCV, 16% SCV, 16% EM, 8% Int'l Value, 8% Int'l Sm, 8% US REIT, 8% Int'l REIT, 20% Inter-term US Treas | | "A journey of a thousand miles begins with a single step."
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Re: under performance of EM vs US

Postby YDNAL » Tue Mar 12, 2013 11:45 am

czeckers wrote:I think EM might me emerging markets.

Yes, OP actually identified the Vanguard fund/etf VWO.
rm wrote:Has anyone else noted how poorly EM (VWO) has performed compared to DIA in the past 1yr, 3yr time-frame.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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Re: under performance of EM vs US

Postby garlandwhizzer » Tue Mar 12, 2013 12:17 pm

rm wrote
I can't find a good vehicle for EM small cap (apart from DFA which I don't have access to)


Check out EWX and DGS.

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Re: under performance of EM vs US

Postby grabiner » Wed Mar 13, 2013 11:48 pm

garlandwhizzer wrote:rm wrote
I can't find a good vehicle for EM small cap (apart from DFA which I don't have access to)


Check out EWX and DGS.


In a taxable account, I would avoid those two: EWX has distributed a lot of capital gains, and DGS is dividend-weighted and thus has a higher dividend yield, much of it non-qualified. I use EEMS (from iShares), which hasn't distributed a capital gain in its first two years.

Another alternative is the iShares IEMG, which has a very low expense ratio and includes both large-cap and smallcap.
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Re: under performance of EM vs US

Postby 2beachcombers » Thu Mar 14, 2013 4:38 pm

grabiner wrote:
garlandwhizzer wrote:rm wrote
I can't find a good vehicle for EM small cap (apart from DFA which I don't have access to)


Check out EWX and DGS.


In a taxable account, I would avoid those two: EWX has distributed a lot of capital gains, and DGS is dividend-weighted and thus has a higher dividend yield, much of it non-qualified. I use EEMS (from iShares), which hasn't distributed a capital gain in its first two years.

Another alternative is the iShares IEMG, which has a very low expense ratio and includes both large-cap and smallcap.


Question:

I hold VWO and FSIVX in taxable and IDV and VSS in Roths.

I was about to add EEMS to my VWO holding in taxable and stopped when I read this thread. After comparing the two compositions, it looks like a simpler change would be IEMG, as you recommended.
Since this is in my FIDO account, there would be no buy charge (or sell for TLH), I would still have only one emerging ETF, and the 0.18 er is attractive.
Do you agree?

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Re: under performance of EM vs US

Postby grabiner » Thu Mar 14, 2013 8:29 pm

2beachcombers wrote:Question:

I hold VWO and FSIVX in taxable and IDV and VSS in Roths.

I was about to add EEMS to my VWO holding in taxable and stopped when I read this thread. After comparing the two compositions, it looks like a simpler change would be IEMG, as you recommended.
Since this is in my FIDO account, there would be no buy charge (or sell for TLH), I would still have only one emerging ETF, and the 0.18 er is attractive.
Do you agree?


I'm not sure. If iShares keeps the expense ratio on IEMG at 0.18%, it's lower in cost than the VWO/EEMS combination, and it avoids the potential capital gains which EEMS might distribute. But iShares could raise the expense ratio on IEMG, leaving taxable investors stuck with a higher-cost option. IEMG has an advantage in an IRA, as you can always sell without any cost other than the transaction cost if the expense ratio rises.

I use VWO/EEMS myself (actually, I hold the Admiral shares rather than the ETF class of Emerging Markets Index), and I am locked into that combination by large capital gains in Emerging Markets Index.
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Re: under performance of EM vs US

Postby 2beachcombers » Thu Mar 14, 2013 8:54 pm

David, thanks. Will do some additional analysis. As always , appreciate your advice.

As you have advised in the past, the Foreign Tax credit is a bonus in taxable. I have kept Fsivx and VWO in taxable due to lower cap gains and lower dividends(compared to VSS).
I do have the ability to move the emerging to deferred as my deferred is now 20% larger than taxable.

100% of investments have >20yr horizon as all is for heirs, charity. All investments are my hobby. Something to keep my mind engaged.

Not familiar with Spartan version of VWO.

Have recently moved VSS to Deferred for reduce exposure to unqualified Dividends and management of total dividends. Don't need, don't Want dividends.

Have 250K carry over tax losses to play with, to move things around with no costs

I also believe the trend is lower er cost---so if the er is increased--I will switch back to another option or Vanguard ETFs.

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Re: under performance of EM vs US

Postby madbrain » Fri Mar 15, 2013 9:04 pm

YDNAL wrote:
rm wrote:Has anyone else noted how poorly EM (VWO) has performed compared to DIA in the past 1yr, 3yr time-frame. The last time I remember EM performing so poorly, they came roaring back. Similar thing is noticed for VSS vs US small cap. I can't find a good vehicle for EM small cap (apart from DFA which I don't have access to)

I am looking to invest some new cash into my taxable and I am leaning towards over-weighting VWO, VSS over SPY. I see myself being underweight right now in the EM (primarily because US markets have done so well lately). Isn't the risk-reward of EM still holding true?

Is that the same EM and SPY here?

    Extended Mkt Index Inv VEXMX
    1 year 14.04%
    3 year 15.60%
    5 year 7.57%
    10 year 11.96%
    Since 12/21/87 10.54%

    SPY (NAV)
    1 year 15.97
    3 year 12.86
    5 year 5.60
    10 year 8.96
    15 year 4.33


Where did you get the 14.04% for VEXMX 1-year ?

I bought some VWO on 3/5/2012 and my average cost basis is $44.45 . It's trading at $43.21 . The loss is larger than the 2 dividends I received on 9/21/2012 and 12/27/2012.

So I would say, in the last 12 months period, EM certainly has done poorly for me. But I'm still not selling it. My horizon when I bought it was more than 12 months.
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Re: under performance of EM vs US

Postby norookie » Fri Mar 15, 2013 9:22 pm

:happy
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