VWO vs VSS [Vanguard Emerging Markets Stock vs. FTSE All-World ex-US Small-Cap]

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Pharmacist
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VWO vs VSS [Vanguard Emerging Markets Stock vs. FTSE All-World ex-US Small-Cap]

Post by Pharmacist » Wed Apr 27, 2016 2:22 pm

I'm looking at my international allocation and I was originally thinking 50 total international and 50 emerging markets for an aggressive position.

Looking on Vanguard I discovered a total international small cap ETF (holdings are 18% in emerging markets... the rest is small cap developed). What are your thoughts on this as opposed to an emerging markets fund?

Maybe 50 total international then 25 and 25 for a small cap tilt and emerging markets exposure? Is this even worth the hassle if I'm only aiming for 20% international exposure to begin with?

am
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Re: VWO vs VSS

Post by am » Wed Apr 27, 2016 2:38 pm

No, not worth it. Use vxus (total international) and call it a day. Keep things simple.

Pharmacist
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Re: VWO vs VSS

Post by Pharmacist » Wed Apr 27, 2016 2:46 pm

am wrote:No, not worth it. Use vxus (total international) and call it a day. Keep things simple.


What's the difference between VXUS and VWO?

mongstradamus
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Re: VWO vs VSS

Post by mongstradamus » Wed Apr 27, 2016 2:52 pm

Pharmacist wrote:
am wrote:No, not worth it. Use vxus (total international) and call it a day. Keep things simple.


What's the difference between VXUS and VWO?


Major difference is emerging market vs total market ?

Angst
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Re: VWO vs VSS

Post by Angst » Wed Apr 27, 2016 2:59 pm

For International Vanguard funds, I think you get more bang for your aggressive buck by targeting small cap than EM. I'd suggest 50/50 Total Int'l / VSS. And they both have EM in them already.

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ruralavalon
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Re: VWO vs VSS

Post by ruralavalon » Wed Apr 27, 2016 3:02 pm

Pharmacist wrote:
am wrote:No, not worth it. Use vxus (total international) and call it a day. Keep things simple.


What's the difference between VXUS and VWO?

The question illustrates a good reason to use fund names and not just ticker symbols alone.

Vanguard Total International Stock Market ETF (VXUS)
Vanguard FTSE Emerging Markets ETF (VWO)
Vanguard FTSE All-world ex-U.S. Small-cap ETF (VSS)

I agree just keep it simple and just use Vanguard Total International Stock Market.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: VWO vs VSS

Post by jhfenton » Wed Apr 27, 2016 3:22 pm

My 50% international stake is roughly 15% VTMGX/VEA (Developed Markets), 15% VEMAX/VWO (Emerging Markets), 15% VSS (Intl Small), 5% VGRLX/VNQI (ex-US Real Estate). With the additional of small cap to Developed Markets and Emerging Markets, there is more overlap, but I don't mind the extra small cap. (There was always some overlap, with some emerging markets in both ex-US Small and ex-US Real Estate.)

Pharmacist
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Re: VWO vs VSS

Post by Pharmacist » Wed Apr 27, 2016 6:37 pm

Is there anywhere where I can search historical returns of these indices?

The ETFs only go back ~10 years. I really would prefer the heavy small cap/emerging market tilt as the above poster. Sure... simple is good but it's not really that hard to rebalance 2 extra funds in a Roth...

Also why is it that there is international large cap/total international/international small cap but no mid cap?

selters
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Re: VWO vs VSS

Post by selters » Wed Apr 27, 2016 6:44 pm

http://www.msci.com and use the index performance page.

Or you could just search for the corresponding index fact sheets for msci indices at http://www.google.com (for example, search for "msci acwi ex us small cap index fact sheet"). FTSE also has index fact sheets, but I'm not used to using them, so I cannot help you with those.

Total international: msci acwi ex us index
Total international small cap: msci acwi ex us small cap index

Pharmacist
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Re: VWO vs VSS

Post by Pharmacist » Wed Apr 27, 2016 7:06 pm

selters wrote:http://www.msci.com and use the index performance page.

Or you could just search for the corresponding index fact sheets for msci indices at http://www.google.com (for example, search for "msci acwi ex us small cap index fact sheet"). FTSE also has index fact sheets, but I'm not used to using them, so I cannot help you with those.

Total international: msci acwi ex us index
Total international small cap: msci acwi ex us small cap index


Thanks!

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Re: VWO vs VSS

Post by grabiner » Wed Apr 27, 2016 7:21 pm

You have to decide what international risks you want to take. VXUS (Total International) is the default position, but you can choose to overweight small-cap or emerging markets, to get more risk with the potential for higher returns and better diversification.

I use both, primarily for the diversification; I expect emerging markets and small-cap stocks to be less correlated to US stocks than developed large-cap stocks are.

I would split my international 25/25/25/25 between developed large, emerging large, developed small, and emerging small if there were no extra cost involved. However, developed large is less expensive (particularly in a taxable account, because of more qualified dividends), and emerging small is much more expensive except to the extent you can get it as part of VWO (which includes small-caps) and VSS (which includes emerging markets), so my target is 3/8 developed large, 1/4 emerging large, 1/4 developed small, and 1/8 emerging small.
David Grabiner

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ruralavalon
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Re: VWO vs VSS

Post by ruralavalon » Thu Apr 28, 2016 10:50 am

Pharmacist wrote:Is there anywhere where I can search historical returns of these indices?

The ETFs only go back ~10 years. I really would prefer the heavy small cap/emerging market tilt as the above poster. Sure... simple is good but it's not really that hard to rebalance 2 extra funds in a Roth...

Also why is it that there is international large cap/total international/international small cap but no mid cap?

You could check the returns of the corresponding Vanguard mutual funds, at Vanguard the ETF is just another share class of the mutual fund

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Re: VWO vs VSS [Vanguard Emerging Markets Stock vs. FTSE All-World ex-US Small-Cap]

Post by saltycaper » Thu Apr 28, 2016 11:18 am

I don't know what you should do, but I'm about 40/30/30 VXUS/VWO/VSS with a 40% int'l equity allocation. I overweight small and emerging for less correlation with U.S. equities. Note VSS has more mid-cap stocks than small-cap stocks according to M*, so not ideal, but I won't pay excessive ERs for this endeavor.

I use VXUS plus overweights rather than roll my own combination of large and developed stocks because 1) I know that I'm covered with a total int'l position should companies move between small/large and emerging/developed indexes, 2) should I choose to simplify in the future to a single int'l holding, I don't have to sell all of my current positions to get there, just some of them, and 3) I'm always overweight by a easily identifiable amount regardless of the current market weight, whereas if I split developed/emerging, for instance, I don't know how much I'm overweight/underweight without checking on the current market weight.
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Re: VWO vs VSS [Vanguard Emerging Markets Stock vs. FTSE All-World ex-US Small-Cap]

Post by 4th and Inches » Thu Apr 28, 2016 11:49 am

Why doesn't Vanguard have an admiral version of Vanguard FTSE All-World ex-US Small-Cap Index Fund?

Does anybody know?

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Re: VWO vs VSS [Vanguard Emerging Markets Stock vs. FTSE All-World ex-US Small-Cap]

Post by InvestorNewb » Thu Apr 28, 2016 11:58 am

Check out the 16 year return of the Vanguard Total International Stock Index Fund (VGTSX). Do you really want to add more risk?
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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Re: VWO vs VSS [Vanguard Emerging Markets Stock vs. FTSE All-World ex-US Small-Cap]

Post by abuss368 » Thu Apr 28, 2016 12:32 pm

Pharmacist wrote:I'm looking at my international allocation and I was originally thinking 50 total international and 50 emerging markets for an aggressive position.

Looking on Vanguard I discovered a total international small cap ETF (holdings are 18% in emerging markets... the rest is small cap developed). What are your thoughts on this as opposed to an emerging markets fund?

Maybe 50 total international then 25 and 25 for a small cap tilt and emerging markets exposure? Is this even worth the hassle if I'm only aiming for 20% international exposure to begin with?


Hi Pharmacist,

I would consider total market investing rather than the international components such as emerging markets, small cap, etc. Vanguard's Total International Stock Index Fund is an excellent option that is low cost, very diversified with thousands on stocks, and provides cash flow from dividends each quarter. Admiral shares are an option. Emerging markets comprise 20% - 25% of the Total International Stock Index fund.

Remember, Jack Bogle has always said simplicity is the master key to financial success!

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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