International -- VXUS or slice and dice?

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DebiT
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International -- VXUS or slice and dice?

Post by DebiT » Sat May 19, 2018 3:59 pm

We're 60, 7-10 years from retirement, 50/50 with as much as 20% of that international, recently read McClung's book , not sure if I'm going to use his portfolios. If I did it would be the Evanson 10x10 portfolio (which I"ll put at the bottom of my post). I'm leaning towards doing so eventually, just to have better diversification for the long haul. Rebalancing annually doesn't scare me.

Having said that, I'm ready to modify my international holdings. From my pre-Boglehead days, it looks like this currently (%ages are of international allocation)

25% ARTIX, Artisan International fund , ER 1.19
25% DODFX, Dodge and Cox International fund, ER .69
50% VXUS, Vanguard Total International, ER .11

My choices are to simply dump the 2 managed funds and have totally VXUS (my understanding is that this is what Boglehead's use for a single fund international holding -- am I right?)

or

take this as an opportunity to move the international portion into 6 ETFs available at Schwab (or funds if I can find them). Again, suggested portfolio is below.

My question is, what do Boglehead's tend to use for their International allocation, and what's the typical range of slice and dice, if any? Curious if it seems worth it.

McClung Evanson slice and dice portfolio funds

Based on 50/50 allocation
% Fund ETF
US Large 5 VFINX
US LV 5 VIVAX
US S Ble 5 NAESX/BRSIX
US SV 5 VISVX
REIT US 2.5 VGSIX
REIT Intl 2.5 VGXRX
Intl Large 5 VDMIX VEA
Intl LV 5 VTRIX VEA
Intl Small 5 VINEX/VFSVX VSS
Intl SV 5 DLS/GMISX/VFSVX DLS
Emerg Sm 2.5 DGS/EEMS DGS/EEMS
Emerg SV 2.5 DEM/EVAL DEM/EVAL
ST Treasury 12.5 VFISC
Int Term Trea 12.5 BFITX
TIPS 25 VIPSX
Age 60, complete retirement not til 70, target is 50/50 -- Stock US 30, Intl 15, REIT 5. Bonds US 45, cash ~5

software
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Re: International -- VXUS or slice and dice?

Post by software » Sat May 19, 2018 4:43 pm

DebiT wrote:
Sat May 19, 2018 3:59 pm
We're 60, 7-10 years from retirement, 50/50 with as much as 20% of that international, recently read McClung's book , not sure if I'm going to use his portfolios. If I did it would be the Evanson 10x10 portfolio (which I"ll put at the bottom of my post). I'm leaning towards doing so eventually, just to have better diversification for the long haul. Rebalancing annually doesn't scare me.

Having said that, I'm ready to modify my international holdings. From my pre-Boglehead days, it looks like this currently (%ages are of international allocation)

25% ARTIX, Artisan International fund , ER 1.19
25% DODFX, Dodge and Cox International fund, ER .69
50% VXUS, Vanguard Total International, ER .11

My choices are to simply dump the 2 managed funds and have totally VXUS (my understanding is that this is what Boglehead's use for a single fund international holding -- am I right?)

or

take this as an opportunity to move the international portion into 6 ETFs available at Schwab (or funds if I can find them). Again, suggested portfolio is below.

My question is, what do Boglehead's tend to use for their International allocation, and what's the typical range of slice and dice, if any? Curious if it seems worth it.

McClung Evanson slice and dice portfolio funds

Based on 50/50 allocation
% Fund ETF
US Large 5 VFINX
US LV 5 VIVAX
US S Ble 5 NAESX/BRSIX
US SV 5 VISVX
REIT US 2.5 VGSIX
REIT Intl 2.5 VGXRX
Intl Large 5 VDMIX VEA
Intl LV 5 VTRIX VEA
Intl Small 5 VINEX/VFSVX VSS
Intl SV 5 DLS/GMISX/VFSVX DLS
Emerg Sm 2.5 DGS/EEMS DGS/EEMS
Emerg SV 2.5 DEM/EVAL DEM/EVAL
ST Treasury 12.5 VFISC
Int Term Trea 12.5 BFITX
TIPS 25 VIPSX
In my opinion that is way too many funds. I avoid slices smaller than 10%.

I have 40% of my stock allocation in international. Of that 40%, 20% is VTIAX (total int’l), 10% is VEMAX (EM) and 10% is VSS (Int’l Small).

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indexfundfan
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Re: International -- VXUS or slice and dice?

Post by indexfundfan » Sat May 19, 2018 5:28 pm

I have only VEA & VWO in my international allocation, in the ratio 3:2.
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heyyou
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Re: International -- VXUS or slice and dice?

Post by heyyou » Sat May 19, 2018 6:34 pm

This is Trev H's answer about historical slice and dice performance versus just one domestic large blend plus one foreign large blend funds.
viewtopic.php?f=10&t=38374
Just read the first couple of pages, the rest is repetitious.
In the introduction, he does have EM and REIT in his portfolio, but the graph is just a straight comparison of the S&D vs. the two LB combo.

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Re: International -- VXUS or slice and dice?

Post by abuss368 » Sat May 19, 2018 6:46 pm

We have invested in Vanguard Total International Stock and Vanguard's International REIT/RE Index fund for many years. International is 40% of our equities overall. Total International is 28% and Total International Real Estate is 12%. How was that calculated? Of the 40% overall, real estate is 30% of that or 12% in total.
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am
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Re: International -- VXUS or slice and dice?

Post by am » Sat May 19, 2018 7:13 pm

Vxus- total international is more than enough.

livesoft
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Re: International -- VXUS or slice and dice?

Post by livesoft » Sat May 19, 2018 7:39 pm

VXUS did not exist when I set up most of my international funds. Then along the way, I wanted more tax efficiency, so I split international for that as well.

So I have
VEA and VEU in taxable since they are reasonably tax efficient.
VSS and DGS in tax-advantaged.

I won't give fund names because folks will need to research them if they intend to buy them anyways.

In the meantime, I have bought VTIAX (total international) now and then in both taxable and tax-advantaged. I do not currently own VTIAX in taxable.
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DebiT
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Re: International -- VXUS or slice and dice?

Post by DebiT » Sat May 19, 2018 8:12 pm

I've noticed that I am uncomfortable with TrevH's 4 fund portfolio, especially on the US side, because I feel uncomfortable with a 50/50 split between VTI and any small value fund. In other words, it feels like too much small value. I feel more comfortable splitting the differences with a 4 way split between USL, USLV, USSmall, and USSV. I do see that VTI alone doesn't capture much at all of the small cap market. More on that for another post

So here's my question on the international side. Is buying all VXUS "good enough", like buying all VTI could arguably be? Is buying 4-5 international funds, including separate emerging, likely to give the same potential extra diversification internationally that buying 4 US funds above might give? M* definitely shows almost exactly the same style box for VXUS, large, very little small cap representation.

I think what I'm noticing is that it starts to feel scary to have 50% in small cap, on either side of the world, but I also want to come to a thoughtful ISP that is good for the long haul . Having read McClung's book, and lots of associated posts here, I know that over the very long haul, sometimes small does better, sometimes large, sometimes value, sometimes not, so I think that's the attraction for me of the "slice and dice" Evanson 10x10 type of portfolio, even if TrevH's looks about the same over time. It just feels less risky, therefore more able to be stuck with

Does my question even make sense?

TIA
Age 60, complete retirement not til 70, target is 50/50 -- Stock US 30, Intl 15, REIT 5. Bonds US 45, cash ~5

livesoft
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Re: International -- VXUS or slice and dice?

Post by livesoft » Sat May 19, 2018 8:14 pm

No one can tell you what is scary to you and to me.

For instance, I would find it scary not to have about 50% in small caps on both the US and international sides.
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DebiT
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Re: International -- VXUS or slice and dice?

Post by DebiT » Sat May 19, 2018 9:35 pm

I think I know what I want to get to, and knowing me, I just need to do it gradually.
Age 60, complete retirement not til 70, target is 50/50 -- Stock US 30, Intl 15, REIT 5. Bonds US 45, cash ~5

DebiT
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Re: International -- VXUS or slice and dice?

Post by DebiT » Sat May 19, 2018 10:55 pm

So here's a question after digesting all of this. For the sake of simplification let's say that I've been 55/45. On the equities side it's been
VTI 30%
VXUS 20%
RWO 5% (a blend of US and Intl REITs)

My understanding is that TrevH's 4 fund portfolio would be
SPY 25%
VBR 25%
VEU 25%
VSS 25%

Since I like VTI and VXUS, do I gain some diversification by adding a bit of LV and SC, as in
VTI 25%
VBR 5%
VXUS 15%
VSS 5%
RWO 5%

In other words, is some of the diversification already in the VTI as opposed to SPY, and in the VXUS as opposed to VEU?
Age 60, complete retirement not til 70, target is 50/50 -- Stock US 30, Intl 15, REIT 5. Bonds US 45, cash ~5

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Earl Lemongrab
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Re: International -- VXUS or slice and dice?

Post by Earl Lemongrab » Sun May 20, 2018 1:28 pm

You can reduce the amount of small and/or value, but in reality small allocations aren't going to do much one way or the other. You need to have some significant weight to those or just go with broad market and not worry about it.

Trev's point was to pull all those slices together into representative single weights.
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ruralavalon
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Re: International -- VXUS or slice and dice?

Post by ruralavalon » Sun May 20, 2018 2:03 pm

DebiT wrote:
Sat May 19, 2018 3:59 pm
My question is, what do Boglehead's tend to use for their International allocation, and what's the typical range of slice and dice, if any? Curious if it seems worth it.
Age 72, retired, 50/50 asset allocation.

We have 25% of stocks in international stocks and use only Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%.

Vanguard Total International Stock ETF (VXUS) ER 0.11% is the ETF equivalent.

DebiT wrote:
Sat May 19, 2018 10:55 pm
. . . . .
Since I like VTI and VXUS, do I gain some diversification by adding a bit of LV and SC, as in
VTI 25%
VBR 5%
VXUS 15%
VSS 5%
RWO 5%

In other words, is some of the diversification already in the VTI as opposed to SPY, and in the VXUS as opposed to VEU?
Yes the diversification is already there in VTI and VXUS, which are total market ETFs. What you gain is a tilt (overweight allocation) to domestic small-cap value, international small-cap, and real estate.

Both Vanguard Total International Stock ETF (VXUS) and Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) cover larger compnies in both developed and emerging markets. VXUS is more diversified as it also covers stocks of smaller companies, which VEU does not.

SPDR® S&P 500 ETF (SPY) covers stocks of selected large-cap and some mid-cap U.S. companies. Vanguard Total Stock Market ETF (VTI) is more diversified, in addition covering stocks of more mid-cap and small-cap U.S. companies.
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asif408
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Re: International -- VXUS or slice and dice?

Post by asif408 » Sun May 20, 2018 8:02 pm

OP,

You have approximately 20% of your total portfolio in international. I have over 85% of my total portfolio in international, and I only own 3 funds: A total international fund, an emerging market index fund, and a EM value index fund.

I think your plan is overkill, particularly for the small amount of international stock you own. If I held only 20% in international, I would at a maximum only have two funds, and probably just use one. It is highly unlikely that the slices you propose will make much difference. Once you get to holdings less than 10%, they are unlikely to make much difference unless they are very volatile and uncorrelated compared to your other holdings (e.g., precious metals equities). I would say if you are not willing to hold a 10% slice of something I would eliminate it from consideration for your portfolio. Just my 2 cents.

DebiT
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Re: International -- VXUS or slice and dice?

Post by DebiT » Sun May 20, 2018 10:26 pm

I agree; I have come to the same conclusion.

In posting and reading, it is so interesting to hear of different people's allocations. There is a lot of expertise on this forum, and many different conclusions. I continue to learn a lot.

Thanks!
Age 60, complete retirement not til 70, target is 50/50 -- Stock US 30, Intl 15, REIT 5. Bonds US 45, cash ~5

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