Why invest in International Index Fund?

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goodoboy
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Why invest in International Index Fund?

Postby goodoboy » Sun Apr 16, 2017 1:04 pm

Hello,

I have currently been investing in Vanguard Target Retirement 2055 Fund (VFFVX) the past years in 401k.

Alot (35.8%) of money is going into Vanguard Total International Stock Index Fund with no good returns.

I would have made more money investing Vanguard Total Stock Market Index and some bonds, then putting all money in Vanguard Total International Stock Index

Vanguard Total International Stock Index Fund since 1996 returned 4.51%
Vanguard Total Stock Market Index Fund since 1992 returned 9.49%

Why invest in International Stock index fund if it can't compete with the Total Stock Market Index Fund? I could have made alot of money if I just not invest in international stocks and put it in domestic stocks.

Thanks

Jags4186
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Re: Why invest in International Index Fund?

Postby Jags4186 » Sun Apr 16, 2017 1:06 pm

Because the past doesn't always repeat itself in the future. The next 20 years could show a 9.49% return for Int'l and a 4.51% return for US.

goodoboy
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Re: Why invest in International Index Fund?

Postby goodoboy » Sun Apr 16, 2017 1:12 pm

Jags4186 wrote:Because the past doesn't always repeat itself in the future. The next 20 years could show a 9.49% return for Int'l and a 4.51% return for US.


Thanks Jags4186,

I am not sure I understand. But the past shows solid evidence of better returns, what suppose to change in the future? Its all buying stocks anyway. If domestic stocks go down, international stocks go down too. Vice versa if stocks go up.

The point is international stocks has not been making more money then the domestic stocks. If I am betting man, not sure whats suppose to change in the next 20 years. If I am going to risk my 401K account in 90% stocks for the next X amount of years, I want to see performance.

I am just talking common sense here.

zuma
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Re: Why invest in International Index Fund?

Postby zuma » Sun Apr 16, 2017 1:17 pm

Here's a good answer.

rgs92
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Re: Why invest in International Index Fund?

Postby rgs92 » Sun Apr 16, 2017 1:34 pm

Int'l investing is good, but over 35% is too much of a good thing. Try 20% and then stay the course. It often does not correlate with US stocks and that reduces volatility but maintains equity gains, which is just what you want.

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Re: Why invest in International Index Fund?

Postby KyleAAA » Sun Apr 16, 2017 1:57 pm

Yes, the last 20 years has been kind to US stocks. What about the previous 20 years? These comparisons are very sensitive to start and end dates Even within the last 20 years there were long periods of time where international outperformed. In fact, by your exact logic you'd have chosen to avoid US stocks entirely were you making this decision 20 years ago. How would that have turned out?

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Re: Why invest in International Index Fund?

Postby patrick » Sun Apr 16, 2017 2:21 pm

Australian stocks have done much better than US stocks. Why not skip the US and invest in Australia only?

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reriodan
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Re: Why invest in International Index Fund?

Postby reriodan » Sun Apr 16, 2017 2:28 pm

goodoboy wrote:
Jags4186 wrote:Because the past doesn't always repeat itself in the future. The next 20 years could show a 9.49% return for Int'l and a 4.51% return for US.


Thanks Jags4186,

I am not sure I understand. But the past shows solid evidence of better returns, what suppose to change in the future? Its all buying stocks anyway. If domestic stocks go down, international stocks go down too. Vice versa if stocks go up.

The point is international stocks has not been making more money then the domestic stocks. If I am betting man, not sure whats suppose to change in the next 20 years. If I am going to risk my 401K account in 90% stocks for the next X amount of years, I want to see performance.

I am just talking common sense here.


If that is what you think, be glad you aren't Japanese.

herpfinance
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Re: Why invest in International Index Fund?

Postby herpfinance » Sun Apr 16, 2017 3:06 pm

zuma wrote:Here's a good answer.


Excellent post. I like how the 50/50 split produces the best risk-adjusted returns.
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deltaneutral83
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Re: Why invest in International Index Fund?

Postby deltaneutral83 » Sun Apr 16, 2017 3:11 pm

reriodan wrote:
If that is what you think, be glad you aren't Japanese.

I certainly understand this, it seems that the US market cap went down from 46% to 37% since 2003 to now in terms of market cap. Why have international markets lagged in prices?

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Re: Why invest in International Index Fund?

Postby nisiprius » Sun Apr 16, 2017 3:17 pm

deltaneutral83 wrote:
reriodan wrote:
If that is what you think, be glad you aren't Japanese.

I certainly understand this, it seems that the US market cap went down from 46% to 37% since 2003 to now in terms of market cap. Why have international markets lagged in prices?
Where did you get those numbers? Those numbers aren't correct.
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Re: Why invest in International Index Fund?

Postby Christine_NM » Sun Apr 16, 2017 3:25 pm

deltaneutral83 wrote:Why have international markets lagged in prices?


Part of it is the continued increase in the strength of the US dollar. Share prices for international are lower when valued in a stronger currency (US$) than their native one.

When the dollar gets weaker, possibly by design, international funds will skyrocket when priced in $. Then you will be glad you own international. Of course, US may do well too with a more competitive (weaker) currency.

I owned international but no longer bother. Not sure I will live long enough to see a weaker dollar, nor do I need the growth. But if you are younger this is the time to buy intl. Stop buying it and just hold when the dollar weakens. That's an argument against all in one funds, where you buy everything with each purchase.
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SeeMoe
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Re: Why invest in International Index Fund?

Postby SeeMoe » Sun Apr 16, 2017 6:16 pm

You didn't mention Total International Bond Index funds which are not currently offering more than 1% in dividends last I looked. Vanguard says it does offer some diversity, but others say it isn't enough to justify the costs of hedging and currency exchange...The International Stock Index fund though, to me, is a winner that needs to be in our portfolio at, say, 25% to 35% of the stock portion for diversification.

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Re: Why invest in International Index Fund?

Postby whodidntante » Sun Apr 16, 2017 6:26 pm

Recency bias. If you sell now, you'll realize your fears of underperformance. Don't trade in and out.

AlwaysBeClimbing
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Re: Why invest in International Index Fund?

Postby AlwaysBeClimbing » Sun Apr 16, 2017 6:39 pm


deltaneutral83
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Re: Why invest in International Index Fund?

Postby deltaneutral83 » Sun Apr 16, 2017 8:09 pm

AlwaysBeClimbing wrote:I used to ask the same question.
https://www.callan.com/wp-content/uploa ... d_2017.pdf


Wow, emerging markets spent 15 out of 20 years either first or last.

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Re: Why invest in International Index Fund?

Postby Noobvestor » Mon Apr 17, 2017 12:03 am

goodoboy wrote:I am not sure I understand. But the past shows solid evidence of better returns, what suppose to change in the future? Its all buying stocks anyway. If domestic stocks go down, international stocks go down too. Vice versa if stocks go up.


If it doesn't matter, then stay diversified. Your 'stocks anyway' argument works equally well in either direction.

goodoboy wrote:The point is international stocks has not been making more money then the domestic stocks. If I am betting man, not sure whats suppose to change in the next 20 years. If I am going to risk my 401K account in 90% stocks for the next X amount of years, I want to see performance.


Actually, if you're a betting man, you'd be better off to bet on a reversion to the mean. Based on that and valuations, I'd give international better odds for the coming years than domestic. These things go back and forth.

goodoboy wrote:I am just talking common sense here.


Common sense is to diversify and not think too much about short-term returns. You're talking about reducing diversification based on the last few years of returns. Try looking at US versus international from 2000 to 2010. International did pretty well and US lost money after inflation. If you were having this same conversation ten years ago, you'd be arguing to ditch US stocks using the same logic. That would have gone badly for you.
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Re: Why invest in International Index Fund?

Postby climber2020 » Mon Apr 17, 2017 6:16 am

goodoboy wrote:
Why invest in International Stock index fund if it can't compete with the Total Stock Market Index Fund? I could have made alot of money if I just not invest in international stocks and put it in domestic stocks.

Thanks


By that logic, you should have taken all your money and invested everything in Priceline stock 10 years ago. You could have made a lot of money if you just didn't invest in international or domestic index funds and put it all in that one stock.

rakornacki1
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Re: Why invest in International Index Fund?

Postby rakornacki1 » Mon Apr 17, 2017 6:32 am

I believe that the simple answer is simply that owning an international stock fund provides for additional diversification. That's it. You can construct a 3-fund portfolio without any international exposure. However, if you would like additional diversification, then chose an intl fund, like VG Total International Stock Fund.
Good luck & great profits!

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stemikger
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Re: Why invest in International Index Fund?

Postby stemikger » Mon Apr 17, 2017 8:04 am

After reading Common Sense on Mutual Funds I never bothered with international investing. It has been over 23 years and I never owned it.

If you own the S&P or Total U.S. Index you are already exposed to international.

I don't like the extra risk that comes with international investing. I also don't care for the currency risk. At the end of the day I don't think it will really matter, so IMHO why bother.

Jack does not think it's an illegitimate choice, but he does say it is not necessary. If you must, no more than 20%.

Having said that, I just don't feel comfortable holding international. I am able to stay the course with my 2 fund 60/40 portfolio or the Vanguard Balanced Index fund. However, if you sleep better holding international then that is the better choice for you. It is far more important to save more and stick with your sub-optimal plan then jump in and out of the optimal plan you can't stick with.

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Re: Why invest in International Index Fund?

Postby asif408 » Mon Apr 17, 2017 8:06 am

goodoboy wrote:
Jags4186 wrote:Because the past doesn't always repeat itself in the future. The next 20 years could show a 9.49% return for Int'l and a 4.51% return for US.


Thanks Jags4186,

I am not sure I understand. But the past shows solid evidence of better returns, what suppose to change in the future? Its all buying stocks anyway. If domestic stocks go down, international stocks go down too. Vice versa if stocks go up.

The point is international stocks has not been making more money then the domestic stocks. If I am betting man, not sure whats suppose to change in the next 20 years. If I am going to risk my 401K account in 90% stocks for the next X amount of years, I want to see performance.

I am just talking common sense here.

goodoboy,

Common sense said 6 years that international stocks (and particularly, emerging markets) were the place to be. Just look how much more money you would have made investing in international or emerging markets from 2001 to 2011 vs US stocks: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So using your "common sense", I would have put my money in emerging markets in 2011. Now looks at the results since then: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D. Not so great, eh?

NiceUnparticularMan
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Re: Why invest in International Index Fund?

Postby NiceUnparticularMan » Mon Apr 17, 2017 8:33 am

I was also going to post the Callan chart, but not surprisingly it was already done.

The 20-year trailing average is also going to keep flipping around depending on what has been hotter over the last few years.

I think there are reasonable arguments to be made about exactly how much a U.S. investor should be putting in international, but a plan to invest only when international has recently been hot (such that the CW is to invest a lot in it) and then disinvest when it has been cold (such that the CW starts to question it) is probably a really bad idea.

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Re: Why invest in International Index Fund?

Postby MossySF » Mon Apr 17, 2017 8:46 am

If you look at the math directly, adding more diversification means you never will have the top performing portfolio for any period. Doesn't matter if it's 1 year, 5 years or 50 years. You will always lag the top portfolio that owned a single asset class (or a single stock) that performed best for that period.

But the inverse is also true. You will always be better than the portfolio that unfortunately picked the worse performing class (or a single stock).

What's more important to you? Average that gets you to your target with higher odds? Or higher risk where you could overperform but you could also underperform?

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Re: Why invest in International Index Fund?

Postby oldcomputerguy » Mon Apr 17, 2017 8:59 am

goodoboy wrote:Hello,

I have currently been investing in Vanguard Target Retirement 2055 Fund (VFFVX) the past years in 401k.

Alot (35.8%) of money is going into Vanguard Total International Stock Index Fund with no good returns.

I would have made more money investing Vanguard Total Stock Market Index and some bonds, then putting all money in Vanguard Total International Stock Index

Vanguard Total International Stock Index Fund since 1996 returned 4.51%
Vanguard Total Stock Market Index Fund since 1992 returned 9.49%

Why invest in International Stock index fund if it can't compete with the Total Stock Market Index Fund? I could have made alot of money if I just not invest in international stocks and put it in domestic stocks.

Thanks


Investing solely in the United States is a bet that the US will always outperform every other market in the world. Although past performance is no guarantee of future results, looking at historical data disputes this position. International equity has at times outperformed US domestic equity.
AlwaysBeClimbing posted a link to the Callan Periodic Chart, you should look it over. For example, note particularly the following:

  • In 1999 and 2001, MSCI Emerging Markets outperformed the S&P 500, while in 2000, MSCI Emerging Markets was the worst-performing index.
  • In 2002-2007, both the MSCI Emerging Markets index and the MSCI EAFE Index outperformed the S&P 500.
  • In 2008, the two worst-performing indices were the MSCI Emerging Markets index and the MSCI EAFE Index.
  • In 2009, both international indices again beat the S&P500.

This is not to endorse international investing in particular, it's just meant to demonstrate that it's impossible to predict which will outperform in any given time period. So it's a mistake to build your asset allocation solely by looking at past performance. Since there is no way to predict if or when outperformance by international assets might happen again (just as there is no way to predict the next bear market), it is just "common sense" to diversify.
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Re: Why invest in International Index Fund?

Postby goodoboy » Mon Apr 17, 2017 10:02 am

asif408 wrote:
goodoboy wrote:
Jags4186 wrote:Because the past doesn't always repeat itself in the future. The next 20 years could show a 9.49% return for Int'l and a 4.51% return for US.


Thanks Jags4186,

I am not sure I understand. But the past shows solid evidence of better returns, what suppose to change in the future? Its all buying stocks anyway. If domestic stocks go down, international stocks go down too. Vice versa if stocks go up.

The point is international stocks has not been making more money then the domestic stocks. If I am betting man, not sure whats suppose to change in the next 20 years. If I am going to risk my 401K account in 90% stocks for the next X amount of years, I want to see performance.

I am just talking common sense here.

goodoboy,

Common sense said 6 years that international stocks (and particularly, emerging markets) were the place to be. Just look how much more money you would have made investing in international or emerging markets from 2001 to 2011 vs US stocks: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So using your "common sense", I would have put my money in emerging markets in 2011. Now looks at the results since then: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D. Not so great, eh?


asif408

Thank you so much for showing me this.

Those two charts you posted just proves I know nothing.

This just proves that I don't know anything about investing and should keep it simple.

Your 2 charts shows emerging markets did well for a few years then us stocks did well for a few years.

Should I have emerging and international stocks in my account?

Thanks

goodoboy
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Re: Why invest in International Index Fund?

Postby goodoboy » Mon Apr 17, 2017 10:09 am

oldcomputerguy wrote:Investing solely in the United States is a bet that the US will always outperform every other market in the world. Although past performance is no guarantee of future results, looking at historical data disputes this position. International equity has at times outperformed US domestic equity.
AlwaysBeClimbing posted a link to the Callan Periodic Chart, you should look it over. For example, note particularly the following:

  • In 1999 and 2001, MSCI Emerging Markets outperformed the S&P 500, while in 2000, MSCI Emerging Markets was the worst-performing index.
  • In 2002-2007, both the MSCI Emerging Markets index and the MSCI EAFE Index outperformed the S&P 500.
  • In 2008, the two worst-performing indices were the MSCI Emerging Markets index and the MSCI EAFE Index.
  • In 2009, both international indices again beat the S&P500.

This is not to endorse international investing in particular, it's just meant to demonstrate that it's impossible to predict which will outperform in any given time period. So it's a mistake to build your asset allocation solely by looking at past performance. Since there is no way to predict if or when outperformance by international assets might happen again (just as there is no way to predict the next bear market), it is just "common sense" to diversify.


oldcomputerguy,

Thanks for your input. Its well appreciated.

Based on your statements and evidence " it is just "common sense" to diversify and i will keep that way.

I will keep 20% in international stocks.

Thanks,

visualguy
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Re: Why invest in International Index Fund?

Postby visualguy » Mon Apr 17, 2017 10:23 am

20 years is a long time for poor results. It's long term, not short term - life is too short to wait for even longer than that to see a decent return.

There is no guarantee that the same won't happen in the US, but it has mostly done better than that over periods of 20 years in the past. Yes, that's extrapolating from the past, but the Bogle approach itself is extrapolating from the past, like it or not.

For me, diversification means not relying so much on stock and bonds, and adding real-estate/rental properties to the mix.

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Re: Why invest in International Index Fund?

Postby NiceUnparticularMan » Mon Apr 17, 2017 11:04 am

visualguy wrote:20 years is a long time for poor results. It's long term, not short term - life is too short to wait for even longer than that to see a decent return.


You have to be very careful with 20-year trailing averages with volatile sequences, because they swing around a lot. These conversations were very different just a few years ago, because the trailing averages were very different.

asif408
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Re: Why invest in International Index Fund?

Postby asif408 » Mon Apr 17, 2017 11:33 am

goodoboy wrote:asif408

Thank you so much for showing me this.

Those two charts you posted just proves I know nothing.

This just proves that I don't know anything about investing and should keep it simple.

Your 2 charts shows emerging markets did well for a few years then us stocks did well for a few years.

Should I have emerging and international stocks in my account?

Thanks

Yes, and you've already got them in your Target Retirement Fund. You can stick with that if you want to keep it simple. If not, you can own the individual funds and pick the percentages you like among US, developed international, and emerging markets.

Personally I tilt heavily towards developed international and emerging market stocks for the reason you initially highlighted in your post: because they've done so poorly compared to US stocks. International stocks have underperformed US stocks for 6 of the past 7 years, and emerging markets have done ever worse than developed. Since 2011 investors have lost money in emerging markets, and barely made any money in developed international, while US investors have doubled their money in that same time frame. It's always difficult emotionally to buy more of something that has performed poorly for several years, but history shows that is usually the time to buy more.

I think the real benefit of international investing isn't necessarily to increase return (it may or may not), but more to prevent concentration in one country's stock market that has a long period of poor returns. Sure, the US has been a great place to invest, but it may not always be. I like to hedge my bets.

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Re: Why invest in International Index Fund?

Postby arcticpineapplecorp. » Tue Apr 18, 2017 8:13 pm

In addition to all these great posts how about recency bias in FAVOR of international:

Image

See how the U.S. has lagged international so far this year (past performance is no guarantee of future results). Aren't you now glad that your target date fund contains international stocks? That's boosting your returns this year (so far).

Total U.S. stock is up 4.91% ytd but
Total international stock is up 7.90%
Emerging market stock index is up 10.77%
FTSE all world ex U.S. small cap is up 9.30%
and International value fund is up 7.31%

(all funds recommended by Merriman in the past in his ultimate buy and hold portfolios). It's a matter of time when we start seeing posts saying, "Why invest in the U.S.?"

I was listening to Ken Fisher on Barry Ritholz's Masters In Business today and he was talking about this very point. That there can be long periods when one will do worse than the other, but when it comes roaring back, you'll be glad you held on. Don't give up on what hasn't done well in the past. Every asset class and market has its day in the sun eventually.
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Re: Why invest in International Index Fund?

Postby MossySF » Tue Apr 18, 2017 9:33 pm

20 years seems like a long time but if you eyeball historic charts, it feels like each cycle of performance/underperformance lasts about 7 years. Hence, 20 years is just enough to have a 2 GOOD/1 BAD or 2 BAD/1 GOOD in some sequence.

Yeah, it sucks that you do have to wait 40 years to see a trend before the pundits declare "it truly is different now". (It took 30 years to break even at an inflation adjusted level after the Great Depression.) But you do have 40+ years -- you have 20-30 while working and another 20-30 while in retirement.

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Re: Why invest in International Index Fund?

Postby goodoboy » Wed Apr 19, 2017 7:35 am

arcticpineapplecorp. wrote:In addition to all these great posts how about recency bias in FAVOR of international:

Image

See how the U.S. has lagged international so far this year (past performance is no guarantee of future results). Aren't you now glad that your target date fund contains international stocks? That's boosting your returns this year (so far).

Total U.S. stock is up 4.91% ytd but
Total international stock is up 7.90%
Emerging market stock index is up 10.77%
FTSE all world ex U.S. small cap is up 9.30%
and International value fund is up 7.31%

(all funds recommended by Merriman in the past in his ultimate buy and hold portfolios). It's a matter of time when we start seeing posts saying, "Why invest in the U.S.?"

I was listening to Ken Fisher on Barry Ritholz's Masters In Business today and he was talking about this very point. That there can be long periods when one will do worse than the other, but when it comes roaring back, you'll be glad you held on. Don't give up on what hasn't done well in the past. Every asset class and market has its day in the sun eventually.


Thank you arcticpineapplecorp,

You are correct. The simple approach for me is to stay diversified across US and NON-US stocks. I have no clue which stocks will outperform.

I am currently and have been 20% allocation to international stocks.

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Re: Why invest in International Index Fund?

Postby Mr.BB » Wed Apr 19, 2017 7:45 am

Your actually doing what every long term investor dreams of, buying in low and then being able to sell high.
If you trade out of your low buy-in position from the Intl. fund, you will be buying into a high buy-in position in U.S. stock/funds.
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Re: Why invest in International Index Fund?

Postby asif408 » Wed Apr 19, 2017 8:06 am

MossySF wrote:20 years seems like a long time but if you eyeball historic charts, it feels like each cycle of performance/underperformance lasts about 7 years. Hence, 20 years is just enough to have a 2 GOOD/1 BAD or 2 BAD/1 GOOD in some sequence.

Good point. And a lot of people here who fall in the US camp cite the poor performance of Vanguard's Total International fund since it's inception (1996) compared to the S&P 500 fund as part of their justification for limiting or not having an international stock allocation. There might be some legitimate reasons for not holding international, but that does not appear to be one of them. Obviously, 1996 was around the start of the tech bubble, so it was at the start of a period of US outperformance. If you look at the performance of Vanguard's international growth and value funds prior to that (they've been around since the early 1980s), they outperformed the S&P 500 from 1984 to 1994, before the tech bubble and the inception of the international fund: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D. I wonder how many of them realize that?

So as you say, the cycles go back and forth. There does not appear to be any consistent outperformance of US or international over any long period of time. In fact, the only discernable pattern I can see is that if the outperformance has occurred for about 5-10 years it usually reverses in the next 5-10 years.

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Re: Why invest in International Index Fund?

Postby goingup » Wed Apr 19, 2017 8:21 am

OP-
It's good, I suppose, that you have adjusted your AA to something you can stick to. It seems you sold the TR2055 and bought the individual components in your 401K. It does seem like an odd moment in time to cut your international exposure in half.

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Re: Why invest in International Index Fund?

Postby Gadget » Wed Apr 19, 2017 8:26 am

For those of you saying you do 20 percent international, you mean 20 percent of your equity allocation right? Not your total portfolio? I'm a new bogglehead and recently picked 30 percent of my equity allocation to be international. Not sure I have any good reason for 30, was just trying to average out what smarter people seemed to be doing.

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Re: Why invest in International Index Fund?

Postby Da5id » Wed Apr 19, 2017 8:28 am

Gadget wrote:For those of you saying you do 20 percent international, you mean 20 percent of your equity allocation right? Not your total portfolio? I'm a new bogglehead and recently picked 30 percent of my equity allocation to be international. Not sure I have any good reason for 30, was just trying to average out what smarter people seemed to be doing.


That is what people mean, yes. Saying in isolation that you have X% international makes little sense, it is the amount relative to US that is interesting.

30% seems like a fine choice.

Da5id
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Re: Why invest in International Index Fund?

Postby Da5id » Wed Apr 19, 2017 8:30 am

goingup wrote:OP-
It's good, I suppose, that you have adjusted your AA to something you can stick to. It seems you sold the TR2055 and bought the individual components in your 401K. It does seem like an odd moment in time to cut your international exposure in half.


I'd agree it is an odd time to drop international when it is under-performing. It smells a bit like the "chasing yesterday's winners" strategy. Would you likewise be increasing international if it over-performs for the next 10 years? Or is this a long term choice?
Last edited by Da5id on Wed Apr 19, 2017 9:10 am, edited 1 time in total.

NiceUnparticularMan
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Re: Why invest in International Index Fund?

Postby NiceUnparticularMan » Wed Apr 19, 2017 8:59 am

Gadget wrote:For those of you saying you do 20 percent international, you mean 20 percent of your equity allocation right? Not your total portfolio? I'm a new bogglehead and recently picked 30 percent of my equity allocation to be international. Not sure I have any good reason for 30, was just trying to average out what smarter people seemed to be doing.


Correct. Most people here start with a division of their portfolio into equity and fixed percentages, and then equity is divided between U.S. and international (or not).

I'd say 30% is a reasonable allocation for a U.S. investor--you can make an argument for matching the global weights, or even overweighting international since you might have exposure to country-specific risk through your job, house, and so on. But if most of your consumption is of USD-denominated goods and services, you face a currency risk issues with international investing. The exact best way to balance all this is anyone's guess since the future is uncertain, but something like 30%, which is a mild underweighting of international, is within the reasonable range where you are taking both the desirability of international diversification and the issue of currency risk serious (FWIW, I am at 40%, and that really isn't much different).

One other note--depending on how you see things, you might also want to make specific choices about international bonds and international real estate. But that is a whole other topic.

moneyman11
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Re: Why invest in International Index Fund?

Postby moneyman11 » Fri May 19, 2017 3:01 pm

goodoboy wrote:Alot (35.8%) of money is going into Vanguard Total International Stock Index Fund with no good returns.

I would have made more money investing Vanguard Total Stock Market Index and some bonds, then putting all money in Vanguard Total International Stock Index

Why invest in International Stock index fund if it can't compete with the Total Stock Market Index Fund? I could have made alot of money if I just not invest in international stocks and put it in domestic stocks.



Interesting that in the month since this post, the return of Total International ex-US (VXUS) - 5.86%, has been more than double the return of Total Stock (VTI) - 2.37%.

https://www.google.com/finance?chdnp=0& ... 2Aaa4L_gBw


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