Alternatives to Total International Stock Index Fund for international investing

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PackersFan12
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Alternatives to Total International Stock Index Fund for international investing

Post by PackersFan12 » Fri Jan 25, 2019 10:53 pm

Hello all- my current allocation is 100% US stocks, but I'm thinking I should allocate a small bit to international stocks simply for diversification purposes and not putting all eggs in one basket.

I'm wondering if there are any viable alternatives to the Total International Stock Index Fund for international investing. Based on my own personal (and admittedly limited) observations, it seems like the areas that make up the total international market never fire on all cylinders, which ultimately results in a wash. For instance, if emerging markets are doing well, another area, such as developed markets, are not doing well and vice versa.

What are my other options? Should I choose a specific area to invest in like solely developed markets? International small caps? Or maybe just go with Total World, so I can also have US as well?

Thanks in advance.

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vineviz
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by vineviz » Fri Jan 25, 2019 11:33 pm

BWildt wrote:
Fri Jan 25, 2019 10:53 pm
I'm wondering if there are any viable alternatives to the Total International Stock Index Fund for international investing. Based on my own personal (and admittedly limited) observations, it seems like the areas that make up the total international market never fire on all cylinders, which ultimately results in a wash. For instance, if emerging markets are doing well, another area, such as developed markets, are not doing well and vice versa.
The benefits of having a diversified portfolio accrue specifically from the fact that all the components do not "fire on all cylinders" at the same time. For any particular period of time, the overall portfolio will always do better than the worst asset and worse than the best asset: that's the point of diversification.

Total International Stock Index Fund is an excellent choice for 30-40% of your equity holdings.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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travelogue
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by travelogue » Fri Jan 25, 2019 11:35 pm

For all the reasons you state above, total international seems a very good option for you. You get the haystack.

Some good ETFs are IXUS and VXUS. With Schwab you have to slice and dice more (SCHF, SCHE, and maybe SCHC).

Mutual funds might include VTIAX and FZILX (Fidelity only).

I'm overweighting EM in my Schwab portfolio with SCHE because I'm taking a modest best on a valuation rebound. IEMG and VWO would be other reasonable options.

What platform are you on? Is this taxable, tax-deferred? What's your goal and time horizon?

However, yes -- I think international has a lot of evidence to support its inclusion in a long-term investor's portfolio.

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7th_Diagram
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by 7th_Diagram » Fri Jan 25, 2019 11:42 pm

Total International is the way to go in my opinion; buy the haystack.
"You have to understand, most people are not ready to be unplugged,and many of them are so injured, so hopelessly dependent upon the system, that they will fight to protect it." | ~Morpheus


TropikThunder
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by TropikThunder » Sat Jan 26, 2019 12:25 am

BWildt wrote:
Fri Jan 25, 2019 10:53 pm
Based on my own personal (and admittedly limited) observations, it seems like the areas that make up the total international market never fire on all cylinders, which ultimately results in a wash. For instance, if emerging markets are doing well, another area, such as developed markets, are not doing well and vice versa.
Easy, just decide which segment (DM vs EM, Large Cap vs Small Cap, etc) will do better in the time you own the fund, and just buy that one.

michaeljmroger
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by michaeljmroger » Sat Jan 26, 2019 1:34 am

Unpopular opinion but, I personally prefer Developed Markets over Total International. Emerging markets are simply too volatile for me and I prefer to take the risk elsewhere. In fact, I’m not even convinced about the need for small-caps in Developed Markets, which is why I really like the extremely cheap and tax-efficient SCHF fund.

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bertilak
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by bertilak » Sat Jan 26, 2019 7:48 am

Raymond wrote:
Sat Jan 26, 2019 12:00 am
Vanguard FTSE All-World ex-US Index Fund Admiral Shares (VFWAX) might work for you.
I use that as a result of Tax Loss Harvesting VTIAX (Vanguard Total International Stock Index Fund Admiral Shares). I think I am happy sticking with VFWAX.
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bgf
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by bgf » Sat Jan 26, 2019 8:54 am

I'm coming around to thinking that Total World fits the Boglehead mentality better than the US-Int'l allocation of the Three Fund. I only say this because inherent in the Three Fund is a "split" between US and 'Other.' This split creates all kinds of problems on this forum.

Total World has no split. It is just one single holistic fund. No decision as to if or how much. You just buy the fund and that's that.

Of course, it doesn't get rid of the US - 'Other' academic arguments, but it doesn't promote them either.

logically speaking this makes no sense, im coming at it more from a psychological/emotional 'packaging' or 'advertising' perspective. we all know packaging and advertising affects us at the store. maybe this is similar.
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staythecourse
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by staythecourse » Sat Jan 26, 2019 9:08 am

If I was doing a 3 fund style portfolio I would eliminate total international and do total international mid/ small. It is well diversified in geography, some small and value tilt, lower correlation to a U.S. equities portfolio, etc...

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

lostdog
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by lostdog » Sat Jan 26, 2019 9:46 am

bgf wrote:
Sat Jan 26, 2019 8:54 am
I'm coming around to thinking that Total World fits the Boglehead mentality better than the US-Int'l allocation of the Three Fund. I only say this because inherent in the Three Fund is a "split" between US and 'Other.' This split creates all kinds of problems on this forum.

Total World has no split. It is just one single holistic fund. No decision as to if or how much. You just buy the fund and that's that.

Of course, it doesn't get rid of the US - 'Other' academic arguments, but it doesn't promote them either.

logically speaking this makes no sense, im coming at it more from a psychological/emotional 'packaging' or 'advertising' perspective. we all know packaging and advertising affects us at the store. maybe this is similar.
+1

Anything outside world market cap is a bet. Invest with logic and reason. Not emotional, political and ideological reasons.
VT, BNDW and chill.

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Re: Alternatives to Total International Stock Index Fund for international investing

Post by PaulF » Sat Jan 26, 2019 10:44 am

BWildt wrote:
Fri Jan 25, 2019 10:53 pm
Hello all- my current allocation is 100% US stocks, but I'm thinking I should allocate a small bit to international stocks simply for diversification purposes and not putting all eggs in one basket.

I'm wondering if there are any viable alternatives to the Total International Stock Index Fund for international investing. Based on my own personal (and admittedly limited) observations, it seems like the areas that make up the total international market never fire on all cylinders, which ultimately results in a wash. For instance, if emerging markets are doing well, another area, such as developed markets, are not doing well and vice versa.

What are my other options? Should I choose a specific area to invest in like solely developed markets? International small caps? Or maybe just go with Total World, so I can also have US as well?

Thanks in advance.
Some good food for thought above. However, to directly answer your question, there would be nothing wrong with investing in Vanguard Developed Markets Index Fund (VTMGX) and Vanguard Emerging Markets Stock Index Fund (VEMAX) in whatever proportion you are comfortable with. Presumably, you would go heavier on DM, as EM are currently only about 21% of World ex-US.

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siamond
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by siamond » Sat Jan 26, 2019 11:24 am

lostdog wrote:
Sat Jan 26, 2019 9:46 am
bgf wrote:
Sat Jan 26, 2019 8:54 am
I'm coming around to thinking that Total World fits the Boglehead mentality better than the US-Int'l allocation of the Three Fund. I only say this because inherent in the Three Fund is a "split" between US and 'Other.' This split creates all kinds of problems on this forum.

Total World has no split. It is just one single holistic fund. No decision as to if or how much. You just buy the fund and that's that.

Of course, it doesn't get rid of the US - 'Other' academic arguments, but it doesn't promote them either.

logically speaking this makes no sense, im coming at it more from a psychological/emotional 'packaging' or 'advertising' perspective. we all know packaging and advertising affects us at the store. maybe this is similar.
+1

Anything outside world market cap is a bet. Invest with logic and reason. Not emotional, political and ideological reasons.
Agreed with this point of view. If I could recreate my AA from scratch (which I can't, due to a sizable capital gains in my taxable account), I would have Total-World as the foundational and biggest equity position.

This doesn't preclude one to add some targeted tilts though. One could do something like 80% Total-World, 10% US Small-Cap-Value, 10% Emerging as an example. Or 80% Total-World and 20% Total-US to create a domestic skew if this is your thing. This is more future proof than using hard splits all over one's portfolio because it will adjust itself much more gracefully as the market caps boundaries evolve between the various countries (including the US). And such boundaries can change quite dramatically over a decade as this graph illustrates well.

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PackersFan12
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by PackersFan12 » Sat Jan 26, 2019 6:19 pm

Raymond wrote:
Sat Jan 26, 2019 12:00 am
Vanguard FTSE All-World ex-US Index Fund Admiral Shares (VFWAX) might work for you.
How does this fund differ from the Total International index?

TropikThunder
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by TropikThunder » Sat Jan 26, 2019 6:40 pm

BWildt wrote:
Sat Jan 26, 2019 6:19 pm
Raymond wrote:
Sat Jan 26, 2019 12:00 am
Vanguard FTSE All-World ex-US Index Fund Admiral Shares (VFWAX) might work for you.
How does this fund differ from the Total International index?
They track different indexes.

- VFWAX Vanguard FTSE All-World ex-US (VEU is the ETF version) tracks the FTSE All World ex-US index (Developed and Emerging Market's but no small caps)

- VTMGX Vanguard Developed Markets (VEA is the ETF version) tracks the FTSE FTSE Developed All Cap ex-US index (Developed Markets large, mid and small caps but no Emerging Markets)

- VTSAX Vanguard Total International Stock (VXUS is the ETF version) tracks the FTSE Global All Cap ex-US index (Developed and Emerging Markets; large, mid and small caps)

MnD
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by MnD » Sat Jan 26, 2019 6:49 pm

BWildt wrote:
Fri Jan 25, 2019 10:53 pm
Hello all- my current allocation is 100% US stocks, but I'm thinking I should allocate a small bit to international stocks simply for diversification purposes and not putting all eggs in one basket.
Allocating "a small bit" to ex-US stocks isn't going to make any difference given that ex-US stocks are nearly 50% of the global equity market.
If you want diversification away from single-country all-US equity you'll need to have a very substantial position in ex-US including large cap, small cap and emerging markets - otherwise I wouldn't bother. A "small bit" of ex-US is not a lottery ticket or insurance policy that's going to "pay off big" in the event of a US-only equity problems.
Last edited by MnD on Sat Jan 26, 2019 7:30 pm, edited 1 time in total.

Beensabu
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by Beensabu » Sat Jan 26, 2019 7:05 pm

staythecourse wrote:
Sat Jan 26, 2019 9:08 am
If I was doing a 3 fund style portfolio I would eliminate total international and do total international mid/ small. It is well diversified in geography, some small and value tilt, lower correlation to a U.S. equities portfolio, etc...

Good luck.
Yup. If you're not going world market cap, then you might as well have your ex-US allocation in mid/small. Past performance shows pretty much the same volatility and higher return than total international. Of course, that's in the past.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next."

staythecourse
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by staythecourse » Sat Jan 26, 2019 9:26 pm

Beensabu wrote:
Sat Jan 26, 2019 7:05 pm
staythecourse wrote:
Sat Jan 26, 2019 9:08 am
If I was doing a 3 fund style portfolio I would eliminate total international and do total international mid/ small. It is well diversified in geography, some small and value tilt, lower correlation to a U.S. equities portfolio, etc...

Good luck.
Yup. If you're not going world market cap, then you might as well have your ex-US allocation in mid/small. Past performance shows pretty much the same volatility and higher return than total international. Of course, that's in the past.
Also like that with small and value they have low correlation with beta. Unlike Total international which is only beta and since the euro introduction has a VERY high correlation since it is predominate European countries.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Alternatives to Total International Stock Index Fund for international investing

Post by whodidntante » Sat Jan 26, 2019 9:38 pm

lostdog wrote:
Sat Jan 26, 2019 9:46 am

Anything outside world market cap is a bet. Invest with logic and reason. Not emotional, political and ideological reasons.
Investing in a float weighted equity index is also a bet. That's what investing is. You buy something with a positive expected return.

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PackersFan12
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by PackersFan12 » Sun Feb 10, 2019 3:49 am

Bump...I was reviewing Vanguard's international funds today, and I stumbled upon the International Growth Fund. Does anyone use it, or have any opinions on it? I generally prefer index funds, though I am open to certain active managed funds.

bluquark
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by bluquark » Sun Feb 10, 2019 4:33 am

It's not very diversified at about 100 stocks. With so much concentration it can diverge significantly from the index, which lately has been to the positive side of things. I would not call this an alternative to Total International Stock Index Fund because the "Growth" part is way more important than the "International" part. The fund's goal seems to be to pick stocks based on promising growth narratives no matter where in the world they are, and it even decided to break the ex-US idea and hold Amazon and Tesla lately.

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Re: Alternatives to Total International Stock Index Fund for international investing

Post by Every things free » Sun Feb 10, 2019 8:58 am

Consider VEMAX. I like the exposure it has to the emerging markets of the world...China, India etc.
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Re: Alternatives to Total International Stock Index Fund for international investing

Post by mcraepat9 » Mon Feb 11, 2019 2:20 am

BWildt wrote:
Sun Feb 10, 2019 3:49 am
Bump...I was reviewing Vanguard's international funds today, and I stumbled upon the International Growth Fund. Does anyone use it, or have any opinions on it? I generally prefer index funds, though I am open to certain active managed funds.
Why do you like it? How does it fit into your strategy?
Amateur investors are not cool-headed logicians.

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