Need Suggestions for International Exposure in Taxable account

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pmdonca
Posts: 62
Joined: Wed Oct 18, 2017 12:19 pm

Need Suggestions for International Exposure in Taxable account

Post by pmdonca » Tue Jun 30, 2020 8:39 am

Hello Bogleheads,

I am seeking recommendations on Vanguard International and or Emerging market mutual funds for my taxable account.

Do I simply look at returns, what its invested in, expense ratio and turnover?

Is there any recommendations that are favorable for Taxable accounts?

A fund like VWIGX (International Growth) has been dominating on average since 1981, but does this make it a good choice for taxable account despite higher E/R's? Does combining VWIGX with an International Value fund like VTRIX to make up the international portion of portfolio sound like a wise choice?

This assumes that there are no good international funds being offered in retirement (401k, etc.) accounts.

Please give me your thoughts on: VWIGX, VTRIX, VTIAX, or VEMAX.

Thank you in advance and looking forward to reading your feedback.

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geerhardusvos
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Location: heavenlies

Re: Need Suggestions for International Exposure in Taxable account

Post by geerhardusvos » Tue Jun 30, 2020 9:45 am

pmdonca wrote:
Tue Jun 30, 2020 8:39 am
Hello Bogleheads,

I am seeking recommendations on Vanguard International and or Emerging market mutual funds for my taxable account.

Do I simply look at returns, what its invested in, expense ratio and turnover?

Is there any recommendations that are favorable for Taxable accounts?

A fund like VWIGX (International Growth) has been dominating on average since 1981, but does this make it a good choice for taxable account despite higher E/R's? Does combining VWIGX with an International Value fund like VTRIX to make up the international portion of portfolio sound like a wise choice?

This assumes that there are no good international funds being offered in retirement (401k, etc.) accounts.

Please give me your thoughts on: VWIGX, VTRIX, VTIAX, or VEMAX.

Thank you in advance and looking forward to reading your feedback.
In a three fund portfolio, Bogle heads will typically suggest VTIAX or mix the VTMGX/VEMAX to create substantially the same thing and have tax loss harvesting ability or EM tilting
VTSAX and chill

retired@50
Posts: 3043
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Need Suggestions for International Exposure in Taxable account

Post by retired@50 » Tue Jun 30, 2020 10:11 am

pmdonca wrote:
Tue Jun 30, 2020 8:39 am
Hello Bogleheads,
...
Please give me your thoughts on: VWIGX, VTRIX, VTIAX, or VEMAX.
...
Thank you in advance and looking forward to reading your feedback.
I'd suggest you add tax-efficiency to your list of criteria.

Using the Vanguard website for the funds listed you can see that VWIGX and VTRIX have both distributed ST and LT capital gains (in addition to dividends) in the recent past. See the Distributions tab to confirm this fact. This hurts your after-tax performance, which can be confirmed by reviewing the Price & Performance tab and locating the line called "Returns after taxes on distributions".

From personal experience I can tell you that VEMAX isn't particularly tax efficient either. I think less than half of the dividend it provides is qualified, which means more than half is ordinary, thus taxed at a higher rate than qualified.

If you insist on holding emerging markets, then I'd just use the Total International Stock Index fund VTIAX. If you're okay skipping the emerging markets then using VTMGX the Developed Markets Index would likely be best from a tax perspective.

All of these tax considerations will have a bigger impact if you're in one of the higher tax brackets.

Regards,
This is one person's opinion. Nothing more.

dbr
Posts: 32820
Joined: Sun Mar 04, 2007 9:50 am

Re: Need Suggestions for International Exposure in Taxable account

Post by dbr » Tue Jun 30, 2020 10:42 am

pmdonca wrote:
Tue Jun 30, 2020 8:39 am

Do I simply look at returns, what its invested in, expense ratio and turnover?
No, no, no, do not look at returns. Yes, do look at ER and turnover, which will be negligible for any appropriate index fund. You consider the principles of asset diversification and decide if you want an allocation to international bonds. Whether that allocation is located in a taxable account or in a tax deferred account depends on tax efficiency. International stocks are tax efficient.

Here is discussion you can read, but please do not try to compare returns: https://www.google.com/search?sitesearc ... ernational

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ruralavalon
Posts: 18501
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Need Suggestions for International Exposure in Taxable account

Post by ruralavalon » Tue Jun 30, 2020 11:22 am

pmdonca wrote:
Tue Jun 30, 2020 8:39 am
Hello Bogleheads,

I am seeking recommendations on Vanguard International and or Emerging market mutual funds for my taxable account.

Do I simply look at returns, what its invested in, expense ratio and turnover?

Is there any recommendations that are favorable for Taxable accounts?

A fund like VWIGX (International Growth) has been dominating on average since 1981, but does this make it a good choice for taxable account despite higher E/R's? Does combining VWIGX with an International Value fund like VTRIX to make up the international portion of portfolio sound like a wise choice?

This assumes that there are no good international funds being offered in retirement (401k, etc.) accounts.

Please give me your thoughts on: VWIGX, VTRIX, VTIAX, or VEMAX.

Thank you in advance and looking forward to reading your feedback.
In our joint taxable account we use Vanguard Total International Stock Index Fund (VTIAX) ER 0.11% because it is very broadly diversified, has a low expense ratio, and is very tax-efficient.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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CyclingDuo
Posts: 3254
Joined: Fri Jan 06, 2017 9:07 am

Re: Need Suggestions for International Exposure in Taxable account

Post by CyclingDuo » Tue Jun 30, 2020 2:20 pm

pmdonca wrote:
Tue Jun 30, 2020 8:39 am
Hello Bogleheads,

I am seeking recommendations on Vanguard International and or Emerging market mutual funds for my taxable account.

Do I simply look at returns, what its invested in, expense ratio and turnover?

Is there any recommendations that are favorable for Taxable accounts?

A fund like VWIGX (International Growth) has been dominating on average since 1981, but does this make it a good choice for taxable account despite higher E/R's? Does combining VWIGX with an International Value fund like VTRIX to make up the international portion of portfolio sound like a wise choice?

This assumes that there are no good international funds being offered in retirement (401k, etc.) accounts.

Please give me your thoughts on: VWIGX, VTRIX, VTIAX, or VEMAX.

Thank you in advance and looking forward to reading your feedback.
VWIGX is a .43% ER fee - great fund and we've owned it in taxable since the late 80's.

Thoughts on VWIGX here...

viewtopic.php?t=238440

VXUS is a .08% ER fee (VTIAX) - we also hold as it is the total international fund.

VWO is a .1% ER fee (VEMAX) - we also hold it in taxable to cover the emerging markets.

Although a few years old and ER fees have been lowered since, here is a post that covers tax efficiency and the foreign tax credit for some of the international funds.

viewtopic.php?t=188491

Morningstar recommends VXUS.

https://www.morningstar.com/articles/90 ... portfolios

CyclingDuo
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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