In Bill Bernstein's excellent new book Rational Expectations he lists recommended funds. In the international value space he lists:
Powershares FTSE RAFI developed markets ex US (PXF) but omits Vanguard Int'l (VTRIX) value and iShares MSCI Value Index (EFV). However PXF has been lagging both.
The US Powershare RAFI US 1000 is doing well against value competitors. If the index methodology is the same why isn't it's international fund lagging? Since both PXF and EFV are indexes (I realize the former is not cap weighted) are there conditions in which there would be an expected spread between the two?
I've linked the regression factors here http://tinyurl.com/ls8urjl
Many thanks for any insight
Kelly
Int'l value fund question
Re: Int'l value fund question
I meant to say "why is the int'l fund lagging"
Kelly
Kelly
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Re: Int'l value fund question
The methodology is not the same - RAFI uses fundamental weighing and is not market cap based. The Vanguard International Value fund is actively managed, not an index. The EFV product is indexed to MSCI.
In an effort to mitigate the effects of mispricing, the Fundamental Index methodology assigns weights to stocks based on four fundamental factors:
Book value
Trailing five-year average cash flow
Trailing five-year average sales
Trailing five-year average gross dividends
These are objective factors that exist independently of a stock's price and seek to provide metrics of size that are not swayed by the whims of the market.
In an effort to mitigate the effects of mispricing, the Fundamental Index methodology assigns weights to stocks based on four fundamental factors:
Book value
Trailing five-year average cash flow
Trailing five-year average sales
Trailing five-year average gross dividends
These are objective factors that exist independently of a stock's price and seek to provide metrics of size that are not swayed by the whims of the market.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Int'l value fund question
Vanguard Intl Value also has emerging market exposure