Small cap in Vanguard Total International?

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understandingJH
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Small cap in Vanguard Total International?

Post by understandingJH »

Why does VGTSX have 4% in small and 17% in mid-caps, when it's index being tracked (MSCI ACWI ex-US) has about 0% and 11% respectively?

Image

My 401k has an international index tracking MSCI ACWI ex-US in the correct holding percentages. So why is vanguard not tracking the index as well at this point in time? (Benchmark in the pic is the MSCI ACWI ex-US index)
dumbmoney
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Re: Small cap in Vanguard Total International?

Post by dumbmoney »

The index being tracked is MSCI ACWI IMI exUS (note the "IMI"). It includes small caps.
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understandingJH
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Re: Small cap in Vanguard Total International?

Post by understandingJH »

dumbmoney wrote:The index being tracked is MSCI ACWI IMI exUS (note the "IMI"). It includes small caps.
Ah... somehow I missed that. Thank you!

Do you think it matters much if one fund tracks the IMI version and another the non-IMI one (as in the case of my 401k fund)? Growth charts don't seem to make much difference (unless IMI was introduced recently to Vanguard's fund).
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ruralavalon
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Re: Small cap in Vanguard Total International?

Post by ruralavalon »

Growth charts don't seem to make much difference (unless IMI was introduced recently to Vanguard's fund).
As I recall, they started using this index (with mid caps & small caps) in 2010, sorry I can't find the announcement or the exact date.
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dumbmoney
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Re: Small cap in Vanguard Total International?

Post by dumbmoney »

understandingJH wrote: Do you think it matters much if one fund tracks the IMI version and another the non-IMI one (as in the case of my 401k fund)?
The country weights are a little different (since some markets have more eligible small cap stocks than others), but no, not much difference.
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grabiner
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Re: Small cap in Vanguard Total International?

Post by grabiner »

understandingJH wrote:
dumbmoney wrote:The index being tracked is MSCI ACWI IMI exUS (note the "IMI"). It includes small caps.
Ah... somehow I missed that. Thank you!

Do you think it matters much if one fund tracks the IMI version and another the non-IMI one (as in the case of my 401k fund)? Growth charts don't seem to make much difference (unless IMI was introduced recently to Vanguard's fund).
It doesn't make that much difference; a good comparison would be Large-Cap Index versus Total Stock Market Index. However, if you want the small-caps, there is FTSE All-World Ex-US Small-Cap available (better held as an ETF).

You should also check whether your 401(k) fund tracks the all-country index or the EAFE index. The EAFE is more common; it is tracked by Vanguard Developed Markets Index, Fidelity Spartan International Index, and the TSP I fund. If you have an EAFE index, you may want to add an emerging markets fund as well.
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understandingJH
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Re: Small cap in Vanguard Total International?

Post by understandingJH »

grabiner wrote:You should also check whether your 401(k) fund tracks the all-country index or the EAFE index. The EAFE is more common; it is tracked by Vanguard Developed Markets Index, Fidelity Spartan International Index, and the TSP I fund. If you have an EAFE index, you may want to add an emerging markets fund as well.
From the prospectus:
Under normal market conditions, the fund invests at least 80% of its assets in securities listed in the Morgan Stanley Capital International* (“MSCI”) All Country World Excluding U.S. Index
I think M* shows 17% Emerging markets (about the same as the vanguard fund @ 16%).
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