How much to hold in international equities (VTIAX)?

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TarHeel2002
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How much to hold in international equities (VTIAX)?

Post by TarHeel2002 »

I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
wootwoot
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Re: How much to hold in international equities (VTIAX)?

Post by wootwoot »

Zero point zero
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Re: How much to hold in international equities (VTIAX)?

Post by asif408 »

0-100%.

Sorry, couldn't help but be facetious. To answer your question, if you search the forums you will generally see recommendations of between 20-50% on average. That's probably not a bad starting point.

Note this is a highly contentious topic (for whatever reason) and these types of threads tend to go nowhere fast. If you want to know the arguments pro and con it's probably best to use the search function.
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TarHeel2002
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Re: How much to hold in international equities (VTIAX)?

Post by TarHeel2002 »

ha ha...yeah it's tough to get excited about it when the US market has been on such a tear. Looking back a few years it seems like VTIAX only goes sideways... :oops:
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Re: How much to hold in international equities (VTIAX)?

Post by Wanderingwheelz »

I wouldn’t even bother if you’re not going to be at 20%, or more.
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Re: How much to hold in international equities (VTIAX)?

Post by UpperNwGuy »

Most people here describe their international stock holdings as a percentage of the equity portion of their portfolio, not as a percentage of the total portfolio.

The most frequent responses to the "how much" question are:
0% which is what Warren Buffet recommends (and which John Bogle has often advocated)
20% which is what Taylor Larimore recommends (and John Bogle said was the most he would endorse)
40% which is what Vanguard uses for its target date and life strategy funds
45% which is market cap and what you would have if you bought VTWAX

Search the forum with the word "international" and you will find lots of threads discussing this.
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Re: How much to hold in international equities (VTIAX)?

Post by UpsetRaptor »

I've been trying to analyze this question from a more historical perspective recently. What are the factors that lead to a country to outperform or decline over an extended period of history? Is it pure luck, or are there other factors - political system, population size, education systems, access to natural resources, and other such things? If the latter, which factors are the most important?

The US has outperformed ex-US since its inception two and a half centuries ago, as it started as a not-even-top-10 economy, has continued to grow over time, and is now >50% global market weight. Why? Tangible reasons presumably had to apply (not "Because 'MURICA"). What are those reasons, and will they remain, or is the rest of the world catching up?

England/Britain outperformed ex-England for a few centuries before the US growth took over. Why? Again, there presumably had to be some reasons for this, beyond "Because HER MAJESTY".

Why did Rome outperform for half a millennium, and why did it, like Britain, eventually decline and/or otherwise underperform a world benchmark?
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Re: How much to hold in international equities (VTIAX)?

Post by jhfenton »

I'll condense my response because it's been discussed so many times on here. :beer

We're at 50% ex-US. Vanguard's multi-asset funds are at 40%. I believe everyone (i.e. US investors) should be at least 30% ex-US.

Most of the 0% ex-US folks are market-timers. Some of them admit it. Some are in denial.
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Re: How much to hold in international equities (VTIAX)?

Post by bloom2708 »

I'm close to 0%.

I try to visualize under-perform scenarios that I can live with.

US +10%, Ex-US +12%

US + 0%, Ex-US 2%

US - 9%, Ex-US -6%

The question will be, are scenarios like this likely? Complete detachment.

US -10%, Ex-US +10%

US 0%, Ex-US +20%

US - 30%, Ex-US +5%

Many threads on this. 0 to 60% Ex-US seems to get most people in range.

What if you are in or close to retirement and don't need when/if international out-performs?
Last edited by bloom2708 on Fri Jan 17, 2020 9:49 am, edited 3 times in total.
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Re: How much to hold in international equities (VTIAX)?

Post by 3funder »

I hold 50%, which is probably too adventurous for most people. Why? Valuations matter. I maintain my 50% exposure via new contributions.
Global stocks, US bonds, and time.
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Re: How much to hold in international equities (VTIAX)?

Post by Northern Flicker »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%?
You are correct, substantial former discussion:

https://www.google.com/search?sitesearc ... nal+stocks

https://www.google.com/search?sitesearc ... l+equities
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Re: How much to hold in international equities (VTIAX)?

Post by Jon_PassiveInvestor »

Nada. I hold 99% in VTSAX
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts
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Re: How much to hold in international equities (VTIAX)?

Post by junior »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
This is like asking which is the one true religion or which political party is best. You're not going to get an agreed upon answer just a lot of opinions.

I suggest you use the search engine if it interests you' there's thousands and thousands of posts on this topic.
fwellimort
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Re: How much to hold in international equities (VTIAX)?

Post by fwellimort »

Market cap according to VT with a tad more on US (rounding issues mostly).

I don't claim to know more than the market. And if US ever stagnates, I don't want to live with that regret.

I would rather trust a company like Toyota over a company like GM.
Samsung over IBM and such.
Tik tok (??) over Facebook and Twitter for social media for the younger generation.

There are many great companies too outside the US. Why not partake on them all.

And the idea that US stocks are already diversified to international because there are profits that come from abroad.
Don't international firms such as Nestle, Toyota, Samsung, etc. also get profits from the US?

As for the person above who quoted about Buffett with no international. That is wrong. Buffett in Berkshire invests abroad and in his talks, is bullish on both China and Brazil.
His 90% 10% was more for motivating the US market post financial crisis and also cause even 10% cash can last several generations (hence he does not have to worry about stagnations after his death to his wife).
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Re: How much to hold in international equities (VTIAX)?

Post by ruralavalon »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
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).
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Re: How much to hold in international equities (VTIAX)?

Post by lostdog »

jhfenton wrote: Thu Jan 16, 2020 3:20 pm I'll condense my response because it's been discussed so many times on here. :beer

We're at 50% ex-US. Vanguard's multi-asset funds are at 40%. I believe everyone (i.e. US investors) should be at least 30% ex-US.

Most of the 0% ex-US folks are market-timers. Some of them admit it. Some are in denial.
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Re: How much to hold in international equities (VTIAX)?

Post by dru808 »

I had a hard time intentionally putting international into my portfolio. It was fine when my main holding was lifestrategy and I took what what was given. Once I sliced n diced I had a hard time including int. started at 5% and slowly crept it to 20% over the course of 3 months. I don’t really want it but figured 20% was a happy medium between 0 and the 40% ish vanguard recommends.
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Re: How much to hold in international equities (VTIAX)?

Post by hisdudeness »

jhfenton wrote: Thu Jan 16, 2020 3:20 pm I'll condense my response because it's been discussed so many times on here. :beer

We're at 50% ex-US. Vanguard's multi-asset funds are at 40%. I believe everyone (i.e. US investors) should be at least 30% ex-US.

Most of the 0% ex-US folks are market-timers. Some of them admit it. Some are in denial.
This really doesn't make any sense.
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Re: How much to hold in international equities (VTIAX)?

Post by mindboggling »

I'm at about 20%. I may build up to 25%, but I don't think I'd ever be comfortable at world market cap (about 45%). 66 years old, retired.
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Re: How much to hold in international equities (VTIAX)?

Post by lazyday »

With Target Retirement (40%) Vanguard makes the choice for you and you don't have to look at it or think about it.

If you used TR and left it alone, you'd probably do better than most Bogleheads.
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Re: How much to hold in international equities (VTIAX)?

Post by TarHeel2002 »

dru808 wrote: Thu Jan 16, 2020 7:52 pm I had a hard time intentionally putting international into my portfolio. It was fine when my main holding was lifestrategy and I took what what was given. Once I sliced n diced I had a hard time including int. started at 5% and slowly crept it to 20% over the course of 3 months. I don’t really want it but figured 20% was a happy medium between 0 and the 40% ish vanguard recommends.
I also had life strategy for awhile and didn't really think about it. It's hard for me to add it back in on my own even though I know I should.


ruralavalon wrote: Thu Jan 16, 2020 4:10 pm
TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
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).
interesting!
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Re: How much to hold in international equities (VTIAX)?

Post by mindboggling »

My IRAs are mostly Vanguard LifeStrategy so I accept what they recommend for international allocation. In taxable I have large (well, large for me) positions in US-only plus a world market ETF, but the portfolio overall is still about 20%. New equity contributions go to the world market ETF.
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Re: How much to hold in international equities (VTIAX)?

Post by lakpr »

UpsetRaptor wrote: Thu Jan 16, 2020 3:13 pm I've been trying to analyze this question from a more historical perspective recently. What are the factors that lead to a country to outperform or decline over an extended period of history? Is it pure luck, or are there other factors - political system, population size, education systems, access to natural resources, and other such things? If the latter, which factors are the most important?

The US has outperformed ex-US since its inception two and a half centuries ago, as it started as a not-even-top-10 economy, has continued to grow over time, and is now >50% global market weight. Why? Tangible reasons presumably had to apply (not "Because 'MURICA"). What are those reasons, and will they remain, or is the rest of the world catching up?

England/Britain outperformed ex-England for a few centuries before the US growth took over. Why? Again, there presumably had to be some reasons for this, beyond "Because HER MAJESTY".

Why did Rome outperform for half a millennium, and why did it, like Britain, eventually decline and/or otherwise underperform a world benchmark?
Colonization, brother! England colonized nearly half the world. US colonized westward. Those countries that did not have a chance to colonize, fared badly in the world economy.

US does have of course, the freedoms, well defined political institutions etc. to her credit, arguably the best and finest in the world which also helped keep her dominance.
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Re: How much to hold in international equities (VTIAX)?

Post by Taylor Larimore »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
TarHeel2002:

This post may be helpful: How Much International Stock? A Suggestion.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I would recommend limiting international investments to a maximum of 20 percent of a global equity portfolio."
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
Jack Bogle and Warren Buffett recommend none! They know more about investing than any of us ever will.

Jack Bogle noted a couple of years ago that international has return since 1994 approximately 280% while US has returned over 700% cumulative. That was a couple of years ago so the difference is probably even wider.
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
I would honestly keep it simple and effective and consider the Jack Bogle and Warren Buffett Two Fund Portfolio of Total Stock (or S&P 500) and Total Bond). Her is an excellent thread with a lot of perspective were you can ask questions: viewtopic.php?f=10&t=188176
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Re: How much to hold in international equities (VTIAX)?

Post by Triple digit golfer »

30%. That's how much.
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Re: How much to hold in international equities (VTIAX)?

Post by lostdog »

When these threads pop up, which is frequent for some reason, it's a good indicator to buy more international.
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
5% barely moves the needle. Jack Bogle often noted that the S&P 500 has approximately one-half of their revenue from overseas.
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
If you do want international anywhere from 20% to 40% of equity (Vanguard's investment experts recommendation) would be reasonable. A 2 fund or 3 fund Portfolio is a winner and will never be below average. We are dancing on the head of a pin.
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Re: How much to hold in international equities (VTIAX)?

Post by Triple digit golfer »

abuss368 wrote: Thu Jan 16, 2020 10:18 pm
TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
If you do want international anywhere from 20% to 40% of equity (Vanguard's investment experts recommendation) would be reasonable. A 2 fund or 3 fund Portfolio is a winner and will never be below average. We are dancing on the head of a pin.
I fully agree. That's why I settled on 30%. I wanted international but I still wanted a U.S. tilt. It seems like the average recommendation is always around 30%. I would be comfortable with anywhere from 20 to 40%. No more, no less. So, 30% it is.
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Re: How much to hold in international equities (VTIAX)?

Post by 7eight9 »

The United States has been lucky. No other way to put it. On the right side of two world wars. Not conquered. No wonder it has done so well. And yet the Japanese market far surpassed the US market circa 1989.

Trees don't grow to the sky. Some think that the US market will dominate in the next century. To me that reeks of hubris (and performance chasing).

I'd bet on the whole haystack - not a small fraction of it.

Best of luck in your decisions.
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Re: How much to hold in international equities (VTIAX)?

Post by tucker99 »

VTIAX pays more dividends than VTSAX. What's not to like? For a young investor it feeds itself and grows quicker.
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Re: How much to hold in international equities (VTIAX)?

Post by Phineas J. Whoopee »

Hi TarHeel2002.

Opinions here are all over the map, so to speak. For US investors anywhere from zero to their share of global equity market capitalization have been advocated, and occasionally more than that.

I personally keep 40% of my equity allocation outside the US, in a total-market fund, but that's not a recommendation. It's based on my own analysis of my circumstances. It isn't because I think it will cause me to outperform anybody or anything else. It's for risk management and diversification. Maybe a few minutes after I've died, at which point obviously I won't know or care, it will have returned more or less than some other allocation.

You won't, here, get a consensus answer telling you how much.

PJW
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Re: How much to hold in international equities (VTIAX)?

Post by Vulcan »

Zero in VTIAX.
Zero in VTSAX.
100% in VTWAX.

"How much international is that?"?
Why do you ask?
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

tucker99 wrote: Thu Jan 16, 2020 10:27 pm VTIAX pays more dividends than VTSAX. What's not to like? For a young investor it feeds itself and grows quicker.
A little higher tax cost in a taxable account. Foreign tax credit as well.
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

Vulcan wrote: Thu Jan 16, 2020 10:42 pm Zero in VTIAX.
Zero in VTSAX.
100% in VTWAX.

"How much international is that?"?
Why do you ask?
Market weight.
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

What is interesting when the topic of international is brought up, and the point of additional diversification, that it does not carry over to international bonds (which is the largest asset class in the world). Vanguard’s research behind adding adding international bonds (was not to increase expected return) but rather increase diversification.
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Re: How much to hold in international equities (VTIAX)?

Post by AerialWombat »

abuss368 wrote: Thu Jan 16, 2020 11:12 pm What is interesting when the topic of international is brought up, and the point of additional diversification, that it does not carry over to international bonds (which is the largest asset class in the world). Vanguard’s research behind adding adding international bonds (was not to increase expected return) but rather increase diversification.
Actually, residential real estate is the largest asset class in the world. More than double the global bond market. That's why, when these conversations about international diversification come up, I ponder why we never talk about diversification into the largest asset class there is. Even domestically in the US, the total stock market cap is roughly equal to the nationwide residential real estate capitalization.
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Re: How much to hold in international equities (VTIAX)?

Post by abuss368 »

AerialWombat wrote: Thu Jan 16, 2020 11:25 pm
abuss368 wrote: Thu Jan 16, 2020 11:12 pm What is interesting when the topic of international is brought up, and the point of additional diversification, that it does not carry over to international bonds (which is the largest asset class in the world). Vanguard’s research behind adding adding international bonds (was not to increase expected return) but rather increase diversification.
Actually, residential real estate is the largest asset class in the world. More than double the global bond market. That's why, when these conversations about international diversification come up, I ponder why we never talk about diversification into the largest asset class there is. Even domestically in the US, the total stock market cap is roughly equal to the nationwide residential real estate capitalization.
Now that is interesting.
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Re: How much to hold in international equities (VTIAX)?

Post by watchnerd »

TarHeel2002 wrote: Thu Jan 16, 2020 2:06 pm I am sure this topic has been thoroughly discussed somewhere - but what percentage of international equities (VTIAX) roughly would you recommend a 39 year old hold in their portfolio? I was thinking 5-10%? Thanks! :sharebeer
I strive to hold market weight, which is roughly 50% total equities (including emerging markets).
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Re: How much to hold in international equities (VTIAX)?

Post by Vulcan »

AerialWombat wrote: Thu Jan 16, 2020 11:25 pm
abuss368 wrote: Thu Jan 16, 2020 11:12 pm What is interesting when the topic of international is brought up, and the point of additional diversification, that it does not carry over to international bonds (which is the largest asset class in the world). Vanguard’s research behind adding adding international bonds (was not to increase expected return) but rather increase diversification.
Actually, residential real estate is the largest asset class in the world. More than double the global bond market. That's why, when these conversations about international diversification come up, I ponder why we never talk about diversification into the largest asset class there is. Even domestically in the US, the total stock market cap is roughly equal to the nationwide residential real estate capitalization.
Residential real estate is currently about 20% of our portfolio. Are you suggesting we should buy a much larger house?:)

P.S. What about personal vehicles as an asset class? Can I own them via an ETF?;)
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: How much to hold in international equities (VTIAX)?

Post by Vulcan »

Deleted duplicate
Last edited by Vulcan on Fri Jan 17, 2020 2:34 am, edited 1 time in total.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: How much to hold in international equities (VTIAX)?

Post by fingoals »

I'm curious about whether recently signed Part 1 of the US-China trade agreement produces a strong short term [1-5 years] positive effect on US stock market, thereby making holding international stocks portfolio for diversification purposes quite useless. However, even if - and it's a pretty big IF - this assumption is true, it seems that, from a typical long-term (or even mid-term) Bogleheads approach perspective, holding international stocks portfolio still makes total sense for most investors who strive for maximum diversification benefits.
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Re: How much to hold in international equities (VTIAX)?

Post by watchnerd »

fingoals wrote: Fri Jan 17, 2020 2:26 am I'm curious about whether recently signed Part 1 of the US-China trade agreement produces a strong short term [1-5 years] positive effect on US stock market
As of today, already priced in.

Old news now
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Wannaretireearly
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Re: How much to hold in international equities (VTIAX)?

Post by Wannaretireearly »

lakpr wrote: Thu Jan 16, 2020 9:22 pm
UpsetRaptor wrote: Thu Jan 16, 2020 3:13 pm I've been trying to analyze this question from a more historical perspective recently. What are the factors that lead to a country to outperform or decline over an extended period of history? Is it pure luck, or are there other factors - political system, population size, education systems, access to natural resources, and other such things? If the latter, which factors are the most important?

The US has outperformed ex-US since its inception two and a half centuries ago, as it started as a not-even-top-10 economy, has continued to grow over time, and is now >50% global market weight. Why? Tangible reasons presumably had to apply (not "Because 'MURICA"). What are those reasons, and will they remain, or is the rest of the world catching up?

England/Britain outperformed ex-England for a few centuries before the US growth took over. Why? Again, there presumably had to be some reasons for this, beyond "Because HER MAJESTY".

Why did Rome outperform for half a millennium, and why did it, like Britain, eventually decline and/or otherwise underperform a world benchmark?
Colonization, brother! England colonized nearly half the world. US colonized westward. Those countries that did not have a chance to colonize, fared badly in the world economy.

US does have of course, the freedoms, well defined political institutions etc. to her credit, arguably the best and finest in the world which also helped keep her dominance.
China and her influence. Every time I leave the US I am amazed at the impact of Chinese investment in every region. Asia, Europe, S. America. They play the long game (generational strategy, not every 4 years). Look at who is investing across the developing and most of the developed world. Chinese: railways, bridges, dams, airports, retail, etc. Simple example, in Aruba (recent trip), the locals were commenting (not necessarily complaining) that Chinese companies have taken over 50% of local businesses over the past year or two!!. We could see this for ourselves!

It's the long game. Who bets against China becoming #1 economy in the world? I dont think anyone. The shenanigans about how that impacts the economy (us vs non us performance) is just that, a debate on how the impact shakes out.
No doubt who the #1, #2 economies (GDP) will be in 15 to 20 years time. Is there?

That's why I keep ploughing $ into non-US funds.
Crystal ball has now gotta start showing me some good cards...
This time next year, we'll be millionaires!
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watchnerd
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Re: How much to hold in international equities (VTIAX)?

Post by watchnerd »

Wannaretireearly wrote: Fri Jan 17, 2020 2:41 am
China and her influence. Every time I leave the US I am amazed at the impact of Chinese investment in every region. Asia, Europe, S. America. They play the long game (generational strategy, not every 4 years). Look at who is investing across the developing and most of the developed world. Chinese: railways, bridges, dams, airports, retail, etc. Simple example, in Aruba (recent trip), the locals were commenting (not necessarily complaining) that Chinese companies have taken over 50% of local businesses over the past year or two!!. We could see this for ourselves!

It's the long game. Who bets against China becoming #1 economy in the world? I dont think anyone. The shenanigans about how that impacts the economy (us vs non us performance) is just that, a debate on how the impact shakes out.
No doubt who the #1, #2 economies (GDP) will be in 15 to 20 years time. Is there?

That's why I keep ploughing $ into non-US funds.
Crystal ball has now gotta start showing me some good cards...
What's your % international?
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AerialWombat
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Re: How much to hold in international equities (VTIAX)?

Post by AerialWombat »

Vulcan wrote: Fri Jan 17, 2020 1:57 am
AerialWombat wrote: Thu Jan 16, 2020 11:25 pm
abuss368 wrote: Thu Jan 16, 2020 11:12 pm What is interesting when the topic of international is brought up, and the point of additional diversification, that it does not carry over to international bonds (which is the largest asset class in the world). Vanguard’s research behind adding adding international bonds (was not to increase expected return) but rather increase diversification.
Actually, residential real estate is the largest asset class in the world. More than double the global bond market. That's why, when these conversations about international diversification come up, I ponder why we never talk about diversification into the largest asset class there is. Even domestically in the US, the total stock market cap is roughly equal to the nationwide residential real estate capitalization.
Residential real estate is currently about 20% of our portfolio. Are you suggesting we should buy a much larger house?:)
No, I’m not suggesting that at all. It’s merely something to think about in regards to these endless asset class allocation discussions. Most Bogleheads seem to overtly dismiss real estate, be that in REIT format or direct ownership. But from a market cap perspective there is nothing bigger than real estate.

Personally, I have 3x more equity in my rentals than I do cash/stocks/bonds. I’m hoarding cash to get that to a 1:1 ratio by end of year, out of desire to boost liquidity.

As for international, I have whatever exists in Wellesley, and have no need to think about it further.
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Re: How much to hold in international equities (VTIAX)?

Post by bogledogle87 »

What are you hoping to accomplish with your International holding? If you were to backtest a 5-10% position with 90-95% US, you would likely find there was very little impact at such a small amount. I agree with others that if you are going to do at all, 20% is probably your starting point. You will find anywhere from 0-50% International recommended on this forum, with hundreds of pages of user's comments justifying their position.

Your challenge will be to determine several things when deciding on International:
1) Why do you want International Equities?
2) How much do you want?
3) Why do you want how much you want?

Some investors never get past #1, deciding they do not want them at all. For those that do, the answers to #2 & #3 become another chore. Again, you will find hundreds of pages of analysis, opinions, and backtesting justifying their stake and claims that what was optimal in hindsight will also be going forward.

There is an emerging camp of Bogleheads who recognize the value in holding International, but choose not to scrutinize or stress over predicting an optimal fixed allocation determined in step #2 & #3 above. We are the Global Cap Investors. We hold what the world holds, and we do so by holding the Total World Index - VTWAX (or VT ETF), or align our VTSAX/VTIAX accordingly.

This World Index fund's allocation between US and International changes as the world changes. Right now, it is about 55% US / 45% Int'l and will float over time. Just as an index investor does not rebalance between fixed allocations of Technology, Energy, and Financial Sectors or Large and Small companies, the Global Cap Investor chooses not to fix US/International either. Instead, we fully immerse ourselves in philosophy of diversified passive equity indexing by purchasing nearly every stock available in the world regardless of size, sector, location, valuation, etc. We sleep soundly knowing that no matter which stocks shine above the others at any point the future, we've got them.
VTWAX and chill
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Re: How much to hold in international equities (VTIAX)?

Post by jhfenton »

hisdudeness wrote: Thu Jan 16, 2020 8:00 pm
jhfenton wrote: Thu Jan 16, 2020 3:20 pm I'll condense my response because it's been discussed so many times on here. :beer

We're at 50% ex-US. Vanguard's multi-asset funds are at 40%. I believe everyone (i.e. US investors) should be at least 30% ex-US.

Most of the 0% ex-US folks are market-timers. Some of them admit it. Some are in denial.
This really doesn't make any sense.
Of course it makes sense, unless you're in denial. :beer

Most of the 0% ex-US folks point to the last decade of out-performance of US markets to justify their position, and bias in favor of what has performed well in the recent past is market timing. (And in the long run, performance chasing is usually counterproductive.)
lostdog wrote: Thu Jan 16, 2020 10:08 pm When these threads pop up, which is frequent for some reason, it's a good indicator to buy more international.
I agree. With all these discussions, I have a strong urge to up my ex-US to 52.5%.
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