To add an international fund or not?

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tman9940
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To add an international fund or not?

Post by tman9940 » Tue Dec 04, 2018 1:13 pm

I constantly ask myself this question. Sometimes, I am of the advice of JLCollins who says there is indirect exposure to international via VTSAX. Other times, I think I am missing out on international by not being directly invested in an international fund. I and currently all (other than my cash accounts) VTSAX, with a small amount in VSMAX. (I am 33, don't mind the risk at my age). If I were to add an International fund, I think I would like it in my Roth account, and would only purchase 3k to get into the fund. Which, if any, international fund would you suggest? I recently read an article that vouches for International Growth (VWIGX). Or is VTIAX a better option? Thanks for any advice!

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ReformedSpender
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Re: To add an international fund or not?

Post by ReformedSpender » Tue Dec 04, 2018 1:25 pm

With your investment horizon of 30+ years, I'd wager to say there are compelling reasons to be diversified. Will US equities continue to dominate? Maybe...but maybe not. International stocks have outperformed before and they'll outperform again (imo).

Personally, I'd stick to the basics and use VTIAX

:beer
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

bikechuck
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Re: To add an international fund or not?

Post by bikechuck » Tue Dec 04, 2018 1:36 pm

What in heaven's name are

VTIAX
VTSAX
VSMAX

and last but not least

VWIGX

If there is one thing that posters could do to make this space more welcoming to inexperienced readers it would be to use the full names and not just the abbreviations for these funds. I know that readers can look them up but wouldn't it be better if the poster took the few extra seconds to type these out rather than forcing multiple readers from having to look them up.

I know that posters are just trying to be helpful but their posts would be more impactful and save a lot of time cumulatively if they used full fund names rather than abbreviations.

Triple digit golfer
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Re: To add an international fund or not?

Post by Triple digit golfer » Tue Dec 04, 2018 1:40 pm

Whether the U.S. market has enough international exposure or not, why exlude companies like Shell, Nestle, Samsung, Toyota, HSBC, Mitsubishi and Unilever? They are large, global companies.

tman9940
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Re: To add an international fund or not?

Post by tman9940 » Tue Dec 04, 2018 1:43 pm

bikechuck wrote:
Tue Dec 04, 2018 1:36 pm
What in heaven's name are

VTIAX
VTSAX
VSMAX

and last but not least

VWIGX

If there is one thing that posters could do to make this space more welcoming to inexperienced readers it would be to use the full names and not just the abbreviations for these funds. I know that readers can look them up but wouldn't it be better if the poster took the few extra seconds to type these out rather than forcing multiple readers from having to look them up.

I know that posters are just trying to be helpful but their posts would be more impactful and save a lot of time cumulatively if they used full fund names rather than abbreviations.
I apologize--
VTIAX-Total International
VTSAX-Total Stock (US)
VSMAX- Small Cap
VWIGX- International Growth

carmonkie
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Re: To add an international fund or not?

Post by carmonkie » Tue Dec 04, 2018 1:44 pm

It looks like you are leaning towards International and just need a small push, you need to ask yourself if you are comfortable holding International markets. You only know the answer. If you do, before determining what fund(s) to use, you need to determine your International Allocation in relation to your overall portfolio. I am about 35% INT but hovering around 33% so any new money goes to either WisdomTree International Small-Cap Dividend ETF (DLS)/ex-US Sm-Cap ETF (VSS) or Vanguard Total International.
Out of my 35% Int, I am 10% Small Cap/ 25% Total International and because Total International and VSS covers Emerging Markets, I do not have a separate EM fund.

There is nothing wrong putting International in Roth, but one thing to consider is that you might run out of room to get your desired allocation to where you want to be, but if you are comfortable with 3K, that is a good start.

pdavi21
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Re: To add an international fund or not?

Post by pdavi21 » Tue Dec 04, 2018 1:46 pm

Start with Total World Stock.
Want more re-balancing and tilting potential and confusion? Total US Stock and Total Intl Stock
More? Split both into large (and midcap) and small cap
More? Split Intl into Developed/ emerging
More? Split Intl into regions

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vineviz
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Re: To add an international fund or not?

Post by vineviz » Tue Dec 04, 2018 1:47 pm

ReformedSpender wrote:
Tue Dec 04, 2018 1:25 pm
With your investment horizon of 30+ years, I'd wager to say there are compelling reasons to be diversified. Will US equities continue to dominate? Maybe...but maybe not. International stocks have outperformed before and they'll outperform again (imo).

Personally, I'd stick to the basics and use VTIAX

:beer
I agree. Diversification is always a smart move.
tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
Which, if any, international fund would you suggest? I recently read an article that vouches for International Growth (VWIGX). Or is VTIAX a better option?
VTIAX is clearly the better option of those two. It offers broad international exposure at a relatively low cost.

Two other options which are arguably better diversifiers would be Vanguard Global Minimum Volatility Fund Admiral Shares (VMNVX) and Vanguard Emerging Markets Stock Index Fund Admiral Shares (VEMAX).

VMNVX holds both US and international stocks, so you'd probably want to double the weight in your portfolio to get the same net international exposure. It's a slightly more defensive way to hold international stocks, with an approach that optimizes diversification and minimizes risk.

VEMAX is somewhat opposite, in that it is a pure play on the riskiest international countries. Emerging market stocks, though, are less correlated with US stocks than are international stocks from developed nations. As a result, VEMAX is a more efficient diversifier than a broad index like VTIAX. It'll be more volatile but likely will offer more bang for the buck, so to speak.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Jordan4FI
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Re: To add an international fund or not?

Post by Jordan4FI » Tue Dec 04, 2018 2:43 pm

I just turned 34 and have been in Vanguard Target Date's for both my RothIRA and my Taxable account, they are pretty much the 4 fund portfolio, I feel that why not own the world. I have good faith that the world will always strive and achieve greater than today.

So trust in the world and the people who work to keep it running. Added up my one fund holds over 10K stocks and over 6K Bonds.. That is the biggest chunk of diversity you can get...

And in the future, I may start up a REIT Index on the side for even more of a mix.

megabad
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Re: To add an international fund or not?

Post by megabad » Tue Dec 04, 2018 2:53 pm

tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
I constantly ask myself this question. Sometimes, I am of the advice of JLCollins who says there is indirect exposure to international via VTSAX. Other times, I think I am missing out on international by not being directly invested in an international fund. I and currently all (other than my cash accounts) VTSAX, with a small amount in VSMAX. (I am 33, don't mind the risk at my age). If I were to add an International fund, I think I would like it in my Roth account, and would only purchase 3k to get into the fund. Which, if any, international fund would you suggest? I recently read an article that vouches for International Growth (VWIGX). Or is VTIAX a better option? Thanks for any advice!
Are you ok not being exposed to ~50% of the global economy? I tilt US but I am personally not ok with being completely unexposed to a huge part of the global economy. Only you can make this call for your own portfolio. The decision to go active vs passive is yours as well. I personally do not feel the China tilt of VWIGX is something I want in my portfolio, but I also use more than index ETFs than VTIAX.

tman9940
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Re: To add an international fund or not?

Post by tman9940 » Tue Dec 04, 2018 3:29 pm

megabad wrote:
Tue Dec 04, 2018 2:53 pm
tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
I constantly ask myself this question. Sometimes, I am of the advice of JLCollins who says there is indirect exposure to international via VTSAX. Other times, I think I am missing out on international by not being directly invested in an international fund. I and currently all (other than my cash accounts) VTSAX, with a small amount in VSMAX. (I am 33, don't mind the risk at my age). If I were to add an International fund, I think I would like it in my Roth account, and would only purchase 3k to get into the fund. Which, if any, international fund would you suggest? I recently read an article that vouches for International Growth (VWIGX). Or is VTIAX a better option? Thanks for any advice!
Are you ok not being exposed to ~50% of the global economy? I tilt US but I am personally not ok with being completely unexposed to a huge part of the global economy. Only you can make this call for your own portfolio. The decision to go active vs passive is yours as well. I personally do not feel the China tilt of VWIGX is something I want in my portfolio, but I also use more than index ETFs than VTIAX.
I get it---And I know the whole "past performance doesn't equal future performance" saying---but looking at VTIAX--since 2010 to today--its gone up $1 and some change...with a lot of volatility. I will probably add a little bit, but I don't get adding large sums to something that hasn't done anything in 8 years, while the US has had the longest bull run ever, I believe.

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vineviz
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Re: To add an international fund or not?

Post by vineviz » Tue Dec 04, 2018 3:47 pm

tman9940 wrote:
Tue Dec 04, 2018 3:29 pm
I get it---And I know the whole "past performance doesn't equal future performance" saying---but looking at VTIAX--since 2010 to today--its gone up $1 and some change...with a lot of volatility. I will probably add a little bit, but I don't get adding large sums to something that hasn't done anything in 8 years, while the US has had the longest bull run ever, I believe.
A more successful approach to investing might be to look at the same data and draw the opposite inference: "I don't get adding large sums to something that has had the longest bull run ever, while international has been getting relatively less expensive for 8 years."
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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vitaflo
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Re: To add an international fund or not?

Post by vitaflo » Tue Dec 04, 2018 3:55 pm

tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
I constantly ask myself this question. Sometimes, I am of the advice of JLCollins who says there is indirect exposure to international via VTSAX.
There is also indirect exposure to US via VTIAX. It goes both ways. As an argument for ignoring international, it's not a persuasive one.

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ruralavalon
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Re: To add an international fund or not?

Post by ruralavalon » Tue Dec 04, 2018 4:58 pm

tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
I constantly ask myself this question. Sometimes, I am of the advice of JLCollins who says there is indirect exposure to international via VTSAX. Other times, I think I am missing out on international by not being directly invested in an international fund.I and currently all (other than my cash accounts) VTSAX, with a small amount in VSMAX. (I am 33, don't mind the risk at my age).

I suggest around 20 - 30% of stocks in international stocks. Vanguard paper (March 2012), "Considerations for investing in non-U.S. equities". Historically, allocating 20% of an equity portfolio to non-U.S. stocks would have captured about 84% of the maximum possible diversification benefit, and allocating 30% of an equity portfolio to non-U.S. stocks would have captured about 99% of the maximum possible diversification benefit (p. 6). (You can find lots of debate here on international allocation, opinions ranging all the way from 00% to 50% of stocks in international stocks. If you want more viewpoints on international stocks please try the Google search box (upper right, this page).

At age 33 I usually suggest a bond or other fixed income allocation as well, around 20%.

Asset allocation is a very personal decision. You must decide on an allocation that is comfortable for you based on your own ability, willingness and need to take risk.


tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
If I were to add an International fund, I think I would like it in my Roth account, and would only purchase 3k to get into the fund. Which, if any, international fund would you suggest? I recently read an article that vouches for International Growth (VWIGX). Or is VTIAX a better option? Thanks for any advice!
For better diversification and a significantly lower expense ratio I suggest Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%, investing in stocks of 6383 international companies, both large and small.

Vanguard International Growth Investor Shares (VWIGX) ER 0.45% invests in stocks of 127 large international companies, with a heavy "growth" tilt.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

HEDGEFUNDIE
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Re: To add an international fund or not?

Post by HEDGEFUNDIE » Tue Dec 04, 2018 9:23 pm

tman9940 wrote:
Tue Dec 04, 2018 3:29 pm
megabad wrote:
Tue Dec 04, 2018 2:53 pm
tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
I constantly ask myself this question. Sometimes, I am of the advice of JLCollins who says there is indirect exposure to international via VTSAX. Other times, I think I am missing out on international by not being directly invested in an international fund. I and currently all (other than my cash accounts) VTSAX, with a small amount in VSMAX. (I am 33, don't mind the risk at my age). If I were to add an International fund, I think I would like it in my Roth account, and would only purchase 3k to get into the fund. Which, if any, international fund would you suggest? I recently read an article that vouches for International Growth (VWIGX). Or is VTIAX a better option? Thanks for any advice!
Are you ok not being exposed to ~50% of the global economy? I tilt US but I am personally not ok with being completely unexposed to a huge part of the global economy. Only you can make this call for your own portfolio. The decision to go active vs passive is yours as well. I personally do not feel the China tilt of VWIGX is something I want in my portfolio, but I also use more than index ETFs than VTIAX.
I get it---And I know the whole "past performance doesn't equal future performance" saying---but looking at VTIAX--since 2010 to today--its gone up $1 and some change...with a lot of volatility. I will probably add a little bit, but I don't get adding large sums to something that hasn't done anything in 8 years, while the US has had the longest bull run ever, I believe.
For anything else you buy, do you get excited to buy it after it has skyrocketed in price, or before?

Why should stocks be any different?

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arcticpineapplecorp.
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Re: To add an international fund or not?

Post by arcticpineapplecorp. » Tue Dec 04, 2018 10:07 pm

when you go to an AMC movie theater and buy a ticket, you just helped a chinese company profit:
https://www.google.com/search?client=fi ... nZ1ySPwKek

Then you go to the concession stand and order a coca cola (U.S. company of course)...

and a box of Nestle raisinets, which is a Swiss company:
https://www.google.com/search?q=is+nest ... fox-b-1-ab

See how your money goes to buy products not just from the U.S.? Don't you want a piece of that action as well?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

retiredflyboy
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Re: To add an international fund or not?

Post by retiredflyboy » Wed Dec 05, 2018 12:06 am

Vanguard total international stock index fund at approx. 20%.
Facts are stubborn things. Everything works until it doesn’t.

pdavi21
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Re: To add an international fund or not?

Post by pdavi21 » Wed Dec 05, 2018 12:24 am

I'll add two important reasons to NOT invest in International or underweight.
1. Foreign tax if you can't claim the credit
2. Currency effects (you price everything in dollars, but you buy businesses that generally operate in and are priced by other currencies). I think this boosts risk without boosting return.

Those being considered, I still go 60/40 and considered myself underweight in INTL.

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oldcomputerguy
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Re: To add an international fund or not?

Post by oldcomputerguy » Wed Dec 05, 2018 6:20 am

tman9940 wrote:
Tue Dec 04, 2018 1:13 pm
I constantly ask myself this question.
Boy, oh boy, have you ever put your finger on one of the Bogleheads "hot topics". Whether to add international (and how much) is one of the most widely debated topics here. That being said, speaking strictly for myself, I do maintain an allocation of 30% of my equity to international index funds. I agree with many here that investing in U.S. companies carries some exposure to international markets. But I invest in international simply because it greatly increases the number of companies I'm invested in. Some here do a "market weighted" split of around 50/50 domestic/international. I back off that a bit (70/30) in an attempt to lower my currency risk a bit. It's what I've decided, and hopefully I'll stick with it come what may.

I have a traditional IRA (containing funds rolled over from my 401k at retirement), while DW has a 401k in her workplace, plus we have a Vanguard brokerage account jointly. In all three we hold international funds. In the Vanguard account, DW has some VEA (FTSE Developed Markets) that carried over from her days trying to pick stocks and ETFs, but the rest of our Vanguard international allocation is in VTIAX (total international).

It's not necessary that you add international if you conclude that you shouldn't. It's a personal choice. Whatever you decide, you should be prepared to keep to your decision in all market conditions, so give it plenty of thought.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

samsdad
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Re: To add an international fund or not?

Post by samsdad » Wed Dec 05, 2018 6:57 am

I posted the following in another thread just last night and think it applies here as well:
Please keep in mind that bonds and international investing are probably the two most considered and contentious topics here.

Some say you will be alright with neither. Others vehemently disagree.

I’d humbly suggest that you are just fine right now. If you care to branch out to these other areas, I would spend a few weeks reading about these two areas and considering whether you would be able to hold them through thick and thin. There’s no better way to hurt your returns than changing horses down the road. I wouldn’t be in a hurry to change my asset allocation by selling a dime of anything until I was absolutely sure of my decision. The market is very volatile right now and you might wind up locking in losses only to change your mind later and perhaps lock in losses again.

If I were you I’d type in “why bonds” and “how much international” or similar in the search box and read till you know both the pros and cons of each (and there are to each, just like there’s pros and cons with your current AA) and then come to a decision.

One of the best things I’ve read here is that someone’s investment policy statement prohibits changes until the change is considered for a few months. Another great thing I recently read is that some of the most successful 401k investors forgot that they had a 401k. I’d only buy something I could stand to buy and forget about.

Personally, right now I couldn’t buy and hold either bonds or international, but that’s just me.
That said, if I were required to put some money in international I’d probably go with the total international fund rather than tilt to growth, emerging markets, etc. But, I’m not required to do that, yet, thank goodness.

I’ve participated in a few international-investing discussions around here and remain completely unconvinced that it’s necessary or even advisable. There are some serious issues with international in my opinion.

Do yourself a favor read and read some more before buying.

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arcticpineapplecorp.
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Re: To add an international fund or not?

Post by arcticpineapplecorp. » Wed Dec 05, 2018 1:13 pm

here's a reason why:
https://www.bogleheads.org/wiki/Domestic/International
https://personal.vanguard.com/pdf/ISGGEB.pdf
viewtopic.php?p=3911793#p3825763
https://nationwidefinancial.com/media/p ... 2224AO.pdf

30% international to 70% U.S. was the highest return per unit of risk (in the past). In other words, you got a higher return with 30% international without any additional risk of 0%-29% international (higher international like 31%+ may have resulted in higher returns (or lower) but carried more risk).

The vanguard link also shows how the volatility of a portfolio that includes international (to a point) decreased relative to a 0% international portfolio. Again, based on Vanguard's paper (link above) they showed 30% international lowered volatility more than less (0%-29%) or more (31%+) international.

That's why I go 30% international. Will the future look different from the past? Possibly, but until new research comes out that shows me a compelling reason to do otherwise, I'll stick to 70/30 (US/Int). In truth, it may not even matter that much in the long run. I don't do it to get higher returns, I do it to diversify risk, and lower volatility, which in my mind is a free lunch (not entirely free, international does cost more, slightly, but I think it's worth it).
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

3funder
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Re: To add an international fund or not?

Post by 3funder » Wed Dec 05, 2018 4:17 pm

ReformedSpender wrote:
Tue Dec 04, 2018 1:25 pm
With your investment horizon of 30+ years, I'd wager to say there are compelling reasons to be diversified. Will US equities continue to dominate? Maybe...but maybe not. International stocks have outperformed before and they'll outperform again (imo).

Personally, I'd stick to the basics and use VTIAX

:beer
+1

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