VXUS - Why? [Vanguard Total International Stock ETF]

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greek-yogurt
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VXUS - Why? [Vanguard Total International Stock ETF]

Post by greek-yogurt »

I recently switched my portfolio with Vanguard to be managed by them and am having second thoughts.

In doing so, they've put me into a pretty heavy position of

VXUS

This makes up 50% of my Roth, which outside of my 401k which I max at 19,500 per year (heavy on VIGAX), is my second most targeted holding where 6K a year goes. After I max the 401k and put the 6k into the Roth, the rest goes into my self managed brokerage or the managed brokerage where they decide where to put the funds.

Why do I dislike this VXUS fund so much and why is the performance of it so very bad? I do not like having my second largest holding being this VXUS and it get destroyed by even the most basic index fund.

I don't mean to come off as crass, I just really dislike this fund and am second guessing the switchover I did to the managed and having a huge chunk of my Roth being in this VXUS fund.

Am I being unreasonable?
snailderby
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by snailderby »

Welcome to the forum!

Why hold international? See this graphic:

Image

Or check out past threads on this. Whether to hold international stocks (and if so, how much) is a frequently-debated topic on this forum. See, e.g., viewtopic.php?t=196956, viewtopic.php?t=255757, viewtopic.php?t=256423, or viewtopic.php?t=318974.

Some Bogleheads don't hold any international stocks. Taylor Larimore recommends 20% in international stocks. Vanguard's target-date funds currently have 40% in international stocks. Other Bogleheads prefer to hold international stocks at market weight.
RickyAZ
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by RickyAZ »

You're allowed to change it. Total Stock, S&P 500 or maybe some QQQ for some spice is more than reasonable for the Roth. All of those give you international exposure anyway. Put the International elsewhere, if you feel you need it, at least until it moves with some conviction.
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vineviz
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by vineviz »

greek-yogurt wrote: Tue Sep 22, 2020 6:32 pm Am I being unreasonable?
Probably.

VXUS is one of the best-managed, low-cost international equity index funds available. Whatever motivated you to move invest with Vanguard to begin with, that reason is the reason that Vanguard is a reasonable core holding for you.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Katietsu
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Katietsu »

greek-yogurt wrote: Tue Sep 22, 2020 6:32 pm
Why do I dislike this VXUS fund so much and why is the performance of it so very bad? I do not like having my second largest holding being this VXUS and it get destroyed by even the most basic index fund.

I don't mean to come off as crass, I just really dislike this fund and am second guessing the switchover I did to the managed and having a huge chunk of my Roth being in this VXUS fund.

Am I being unreasonable?
VXUS is a basic index fund. It’s performance is not so “very bad”. The performance is reflective of the fact that US stocks have had a much better run than international for the last 10 years. If you look at the previous 10 years from 2000 to 2010, you will get a US stock CAGR of 1.2% while Global Ex US was 3.06%. n other words, if this was 2010, VXUS would look like a brilliant choice.

That said, tell Vanguard that you are not keen on international. They use a range for their recommendations. Ask them to use the lowest end of the range. And, in general, be very careful about recency bias for any investment decision.
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Brianmcg321
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Brianmcg321 »

If you don’t like it change it.
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ef11
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by ef11 »

From age 23 to 31 I've had my allocation to international at 25% of total portfolio...

I struggle because we are supposed to buy under performing classes and sell over performing (rebalance).

But, I've decided to adjust it down to 15-20% of my AA instead of 25%.

Wish I would have made this decision 8 years ago, but oh well!
50% S&P 500 IDX ER .01% | 10% Ext Mkt ER .04% | 10% Small Cap Value ER .15% | 20% International TM ER .08% | 10% Vang Total Bond Market ER .03%
lostdog
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by lostdog »

Go ahead and dump.

When it outperforms for awhile, get back into it when it's too late.

With long term investing you will usually have a stinker and then it will switch.

You sound like a classic performance chaser. Good luck.
Last edited by lostdog on Tue Sep 22, 2020 9:29 pm, edited 2 times in total.
am
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by am »

Just be the average investor and chase performance your entire life and underperform the indexes. Increase international when it starts doing well so you can buy high and sell low. Why not stay the course with a fixed % of international no matter what? Rebalance when needed. There will likely be a time in our lives when international will outperform.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by MotoTrojan »

Lol love these replies. Just go 100% into TSLA, I hear they’ll be on sale tomorrow after a rough battery day presentation.

VXUS is a great fund but you shouldn’t arbitrarily hold it in your Roth, it should have a target overall allocation, did Vanguard help you come up with one?

Ah your 401k is in growth... I see your concern. I think that’s a huge mistake right now, but who knows who’s right. Maybe you’ll get lucky, or maybe you’ll learn a valuable lesson. Sounds like a win-win.

Real talk though until you understand what these actually are, you really have no business in anything but total US market and your existing VXUS.
ThePrince
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by ThePrince »

lostdog wrote: Tue Sep 22, 2020 9:15 pm Go ahead and dump.

When it outperforms for awhile, get back into it when it's too late.

With long term investing you will usually have a stinker and then it will switch.

You sound like a classic performance chaser. Good luck.
+1
stimulacra
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by stimulacra »

I hold the admiral fund equivalent: VTIAX

It's just there because I think International will eventually outperform US Equities at some point. I don't know when.

More often than not it's the fund I'm having to rebalance into. I don't think too much about it.

When in doubt I go back to my rationale document to refresh myself as to what I was thinking. Take an opportunity to reevaluate and reassess.

Sometimes it helps to think of it in terms of accumulating absolute shares at a discount when it underperforms versus its performance relative to other assets.

You want volatility.
tibbitts
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by tibbitts »

greek-yogurt wrote: Tue Sep 22, 2020 6:32 pm Am I being unreasonable?
Yes.
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greek-yogurt
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by greek-yogurt »

Thank you for all of the feedback.

Yes, Vanguard did develop an overall strategy and weight to the portfolio and they've modified the holdings in my Roth, Traditional and Brokerage managed accounts after I agreed to let them make the proposed changes and manage the stuff. I am definitely having second thoughts on doing so and it has nothing to do with the very reasonable $300 per year for every 100K fee they impose.

The holdings consist of BND, BNDX, VXUS, VTV, VFX, VMVAX, VPMAX,VSIAX, VTMGX and all those holdings are weighted at the percentages Vanguard chose. I gave them full control of it all as of ~45 days ago.

As the common statement says "past performance is not an indicator of future returns", does this not throw out the idea that saying international has done poorly for the last 10 years so surely it will do better in the future?

On paper only of course, VIGAX has absolutely CRUSHED VXUS.

You cannot argue with what 10K invested in each have actually returned over the last 10 years, which is:

10y 10K into VIGAX is now $54.5K
10y 10K into VXUS is now $13.5K

This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings. I am sure there are many people who choose not to invest in ANY international? The performance of VXUS is just NOT good, regardless of how well it is managed. I am not trying to be combative or argumentative.
snailderby
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by snailderby »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm You cannot argue with what 10K invested in each have actually returned over the last 10 years, which is:

10y 10K into VIGAX is now $54.5K
10y 10K into VXUS is now $13.5K

This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings. I am sure there are many people who choose not to invest in ANY international? The performance of VXUS is just NOT good, regardless of how well it is managed. I am not trying to be combative or argumentative.
To be precise, VXUS's performance over the last 10 years hasn't been good. No one disputes that. But do you know what the next 10 years will hold? I don't.
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climber2020
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by climber2020 »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm This is not "performance chasing" but the observations of a moderately high IQ investor
Your IQ has nothing to do with investing success. Some of the smartest people I know are terrible investors.
bizkitgto
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by bizkitgto »

I have been in VXUS for a long time, it's the best non-US ETF imo - cheap, well diversified and liquid.
Keep it simple: 20% BND, 50% VTI and 30% VXUS
hnd
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by hnd »

as far as international index funds go, there is none better.

as far as how much you should be invested in international? yeah outside a handful of years in the mid 2000's, international has been basically smacked around by US stocks for the past 30 years. 30 years is a long time. Its definitely prudent to look at the 70's and the 80's but its a different time and age economically.

Obviously nobody has any idea what is going to happen. its funny to hear us all continually say it.

For me i have no interest in being anything over 20% in international. I started 20% in 2010 and have sheepishly rebalanced into it so I currently sit at 15% international. When I rebalance in December, i'm going to have a hard time forcing myself to get back between 15-20%.

you'll hear alot about the NIKKEI and all that jazz but thats a chance I'm willing to take.
Buy_N_Hold
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Buy_N_Hold »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings. I am sure there are many people who choose not to invest in ANY international? The performance of VXUS is just NOT good, regardless of how well it is managed. I am not trying to be combative or argumentative.
There are most certainly many investors that do not hold any equities outside of their home country. This home country bias is incredibly difficult to overcome. People are inherently more comfortable with what is familiar, and this is certainly true for investing.

On balance, I think the best asset allocation is the one that you will stick with. While many investors do believe there is real value in maintaining 20-40% of one's portfolio internationally, such a strategy will do you no good at all if you cannot stick with it. In the long-run, your performance will be heavily determined by your tenacity in sticking with your asset allocation decision, and your savings rate to continue to grow your balances.

Personally, I just went from 100% US to 80% US and 20% international. Should something happen that is catastrophic in nature and of particular detriment to the US, that 20% allocation will be an excellent counterbalance. The dramatic out performance of US Growth has been led by the Mega Cap Tech stocks, which in my view are at a size that could create anti-trust threats, just as one example.

In short, go with what you can stick to, and spend the rest of your time working on more important and fulfilling things. Cheers! :happy
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stimulacra
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by stimulacra »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm You cannot argue with what 10K invested in each have actually returned over the last 10 years, which is:

10y 10K into VIGAX is now $54.5K
10y 10K into VXUS is now $13.5K

This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings. I am sure there are many people who choose not to invest in ANY international? The performance of VXUS is just NOT good, regardless of how well it is managed. I am not trying to be combative or argumentative.
You can pat yourself on the back for not being invested in VXUS from 2010 to 2020…

Do you know how US will perform relative to International over the next 10 years? 20 years?

I don't know the answer to that which is why 20% of my equities are vested in International and Emerging.

There are a lot of plausible scenarios to indicate how and why US might underperform this decade or next.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Meg77 »

If you're putting 100% of your 401k contributions into an S&P 500 index or total stock market fund, I don't think it's unreasonable to have 50% of your Roth in international. You'll have over $20K (depending on your match) going into domestic and around $3K into VXUS by the sounds of this plan. That's less than 15%. If VXUS continues to underperform domestic, your weighting will dwindle accordingly over time.

Don't sweat it. Let the managers do their thing, you can tweak as you like by moving around your 401k, and just focus on pouring as much money IN to investments as you can. Savings rate has a lot more to do with success than asset allocation, at least until you have close to 7 figures invested.
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stimulacra
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by stimulacra »

If you're looking solely at the last 10 years of performance you should be solely invested in Netflix…
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by vineviz »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm
This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings.
“I want to buy more of funds that recently performed well” is the very definition of performance chasing.

It’s a behavioral error that no amount of excessive IQ can protect us from, unfortunately.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
absolute zero
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by absolute zero »

It fascinates me that some people can hold a fixed allocation to international, watch it underperform for a decade, and feel tempted to buy more. And yet other investors do the *exact* opposite, either dumping international entirely or reducing their allocation to it.

It makes me wonder how much this difference in behavior is due to (A) personality type vs (B) understanding of how markets work. Both of the actions described above can be dangerous, but I tend to think that one of them (selling the underperformer) is more dangerous and also reflects a more immature understanding of how securities are priced.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by asif408 »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm You cannot argue with what 10K invested in each have actually returned over the last 10 years, which is:

10y 10K into VIGAX is now $54.5K
10y 10K into VXUS is now $13.5K

This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings. I am sure there are many people who choose not to invest in ANY international? The performance of VXUS is just NOT good, regardless of how well it is managed. I am not trying to be combative or argumentative.
The comparison above is poor because it's the best performing segment of one country's stock market over a decade vs. 40-50 markets combined. Not exactly a fair comparison.

This is not meant to be condescending, so I hope you don't take it that way, but a high IQ is not a major priority to good investing, an above average temperament and a good understanding of history are much more important, and I'm not sure if you possess those.

My suggestion is do your own research and look at historical returns by decade of international vs. US stocks, or other assets for that matter. Here's a start, looking at the 2000-2010 period: https://www.portfoliovisualizer.com/bac ... ion3_3=100. Using your logic in August 2010, I would have overweighted foreign stocks, especially emerging markets stocks. After all, US stocks went nowhere for 10 years, at least foreign stocks gave a positive real return, and emerging markets gave very good returns. If you compare emerging markets value stocks to US tech stocks, the results are even more dramatic: https://www.portfoliovisualizer.com/bac ... ion2_2=100

Continuing farther back in history, In the 1990s, US growth stocks crushed everything else, so why not overweight US stocks, especially tech, in 2000? And definitely stay away from emerging markets, as their previous 10 year performance was awful: https://www.portfoliovisualizer.com/bac ... ion2_2=100. Whoops! Bad idea: https://www.portfoliovisualizer.com/bac ... ion2_2=100

In the 1980s, foreign stocks outperformed and Japanese equities had spectacular returns, and at one point made up 60% of the EAFE index and were 40% of the world market cap, larger than the US. Why not overweight Japanese stocks, since the land under the Imperial palace was worth more than all the real estate in California? In the 1970s, oil and precious metals equities outperformed everything else dramatically. With inflation a major threat with no end in sight, why not overweight oil and precious metals in 1980?

Do some research on valuations on precious metals equities and oil stocks vs the US stock market in the 1980s, Japanese equities vs US stocks in 1990, US and developed market tech stocks vs emerging markets stocks in 2000, and emerging markets stocks vs. US stocks in 2010. Here's a start: https://www.gmo.com/contentassets/b3da1 ... ibit-4.png

Do you see any patterns above? What I see is that the best strategy going forward typically is not the one that has performed the best in the last decade. Often it is the strategy that has done worst (or nearly worst) the previous decade.
Last edited by asif408 on Wed Sep 23, 2020 3:57 pm, edited 1 time in total.
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SmileyFace
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by SmileyFace »

absolute zero wrote: Wed Sep 23, 2020 3:48 pm It fascinates me that some people can hold a fixed allocation to international, watch it underperform for a decade, and feel tempted to buy more. And yet other investors do the *exact* opposite, either dumping international entirely or reducing their allocation to it.

It makes me wonder how much this difference in behavior is due to (A) personality type vs (B) understanding of how markets work. Both of the actions described above can be dangerous, but I tend to think that one of them (selling the underperformer) is more dangerous and also reflects a more immature understanding of how securities are priced.
Well-stated.

Part of the problem with folks who start these posts is they feel 10 years is such a long period of time (and it seems long) while in reality a decade is a short period of time when you are investing for a lifetime. OP should look at performance for the last 30 or 40 years - not 10.
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greek-yogurt
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by greek-yogurt »

Snide and unnecessary remarks about TSLA and NFLX aside, thanks to most for the good feedback.

I meant "investor IQ" as in moderately high understanding of investments and working to pay my future self and hit my goals, not the overall IQ. I am very moronic and idiotic on many topics, politics being one of them.

I have 12 months of liquid, maxing 401K, maxing Roth, pumping bi weekly into the taxable borkerage (managed and non managed) as I'm able to.

I put just about everything I can into the markets to maximize dollar cost averaging and am not really giving much of a sh*t about the recent performance or the down day today or new waves of the COVID. Thanks for the thoughts on this VXUS fund. I will likely call Vanguard and see if I can reduce that holding, if not remove it altogether, or replace it with VWILX or move half of it to VWILX.

Thank you, all. Be good.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by vineviz »

greek-yogurt wrote: Wed Sep 23, 2020 4:00 pm Thanks for the thoughts on this VXUS fund. I will likely call Vanguard and see if I can reduce that holding, if not remove it altogether, or replace it with VWILX or move half of it to VWILX.
You’ve decided to ignore all the “good feedback”, then?

I’m still curious what you think your motive for reducing VXUS is if it is not performance chasing. Knowing that might help us provide a more impactful education to others who feel the same way.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by lostdog »

greek-yogurt wrote: Wed Sep 23, 2020 4:00 pm Snide and unnecessary remarks about TSLA and NFLX aside, thanks to most for the good feedback.

I meant "investor IQ" as in moderately high understanding of investments and working to pay my future self and hit my goals, not the overall IQ. I am very moronic and idiotic on many topics, politics being one of them.

I have 12 months of liquid, maxing 401K, maxing Roth, pumping bi weekly into the taxable borkerage (managed and non managed) as I'm able to.

I put just about everything I can into the markets to maximize dollar cost averaging and am not really giving much of a sh*t about the recent performance or the down day today or new waves of the COVID. Thanks for the thoughts on this VXUS fund. I will likely call Vanguard and see if I can reduce that holding, if not remove it altogether, or replace it with VWILX or move half of it to VWILX.

Thank you, all. Be good.
Moving to international growth reeks of performance chasing.

To each their own but it's a mistake to sell low and buy high. I would call it "low IQ" investing.

Answer this seriously please...What are you going to do if VXUS outperforms for a few years? Switch back?
Seasonal
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Seasonal »

If you're selling something that has performed badly in order to buy something that has performed better, then you're performance chasing, however you want to rationalize it. This presumes both investments are broadly diversified and low cost. You can most likely come up with a good and logical sounding reason why the move makes sense. There are equally good and logical sounding reasons for going the other way.

No one knows what the investing future will bring. A change may or may not work out, but switching under the circumstances is not a great strategy.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by visualguy »

DaftInvestor wrote: Wed Sep 23, 2020 3:54 pm
absolute zero wrote: Wed Sep 23, 2020 3:48 pm It fascinates me that some people can hold a fixed allocation to international, watch it underperform for a decade, and feel tempted to buy more. And yet other investors do the *exact* opposite, either dumping international entirely or reducing their allocation to it.

It makes me wonder how much this difference in behavior is due to (A) personality type vs (B) understanding of how markets work. Both of the actions described above can be dangerous, but I tend to think that one of them (selling the underperformer) is more dangerous and also reflects a more immature understanding of how securities are priced.
Well-stated.

Part of the problem with folks who start these posts is they feel 10 years is such a long period of time (and it seems long) while in reality a decade is a short period of time when you are investing for a lifetime. OP should look at performance for the last 30 or 40 years - not 10.
Sure, but ex-US has performed terribly in the longer run as well. For example, under 4%/year nominal for the last 30 years. Even that's not long enough? How about 2%/year less than the US for the last 120 years?

The 10-year "recency" argument is raised again and again in these threads. It gets debunked with people pointing out the 20, 30, 50, 120 year lousy performance, as well as how ex-US had done badly in the long run even when not counting the last 10 years. This doesn't help, though, and again we read about how it's just the last 10 years. :confused
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Stick5vw »

It makes no sense to compare VXUS (an all cap international equity fund) to VIGAX, which is a US large cap growth fund. Apples and oranges.

Figure out what level of international (inc EM) you are comfortable with in your equity portfolio. VXUS is a great holding for this.

Not enough info to give you very much additional advice here.
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SmileyFace
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by SmileyFace »

visualguy wrote: Wed Sep 23, 2020 6:18 pm
DaftInvestor wrote: Wed Sep 23, 2020 3:54 pm
absolute zero wrote: Wed Sep 23, 2020 3:48 pm It fascinates me that some people can hold a fixed allocation to international, watch it underperform for a decade, and feel tempted to buy more. And yet other investors do the *exact* opposite, either dumping international entirely or reducing their allocation to it.

It makes me wonder how much this difference in behavior is due to (A) personality type vs (B) understanding of how markets work. Both of the actions described above can be dangerous, but I tend to think that one of them (selling the underperformer) is more dangerous and also reflects a more immature understanding of how securities are priced.
Well-stated.

Part of the problem with folks who start these posts is they feel 10 years is such a long period of time (and it seems long) while in reality a decade is a short period of time when you are investing for a lifetime. OP should look at performance for the last 30 or 40 years - not 10.
Sure, but ex-US has performed terribly in the longer run as well. For example, under 4%/year nominal for the last 30 years. Even that's not long enough? How about 2%/year less than the US for the last 120 years?

The 10-year "recency" argument is raised again and again in these threads. It gets debunked with people pointing out the 20, 30, 50, 120 year lousy performance, as well as how ex-US had done badly in the long run even when not counting the last 10 years. This doesn't help, though, and again we read about how it's just the last 10 years. :confused
I wasn't drawing conclusions or making allocation suggestions - merely pointing out that a single 10 year period when comparing investment decisions is a short time. In many posts here people talk about last 10 years for various comparisons (not just international). In addition to long time periods another consideration is looking at various 10 and 20 year periods (perhaps the next 10 years will behave more similar to 1999 - 2009 given the rise of FAANG stocks) which might give more insight into what the NEXT 10 or 20 years might bring (which is the real question). Deciding on International Allocation (whether it be 10%, 20%, 50% or 0%) is more about diversification with performance in mind rather than looking at past performance alone.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by jvini »

am wrote: Tue Sep 22, 2020 9:18 pm Just be the average investor and chase performance your entire life and underperform the indexes. Increase international when it starts doing well so you can buy high and sell low. Why not stay the course with a fixed % of international no matter what? Rebalance when needed. There will likely be a time in our lives when international will outperform.
People say they are Bogleheads here, yet let's remember John Bogle didn't believe it was necessary or even a good thing to hold an international fund. Look it up. Let's not be so quick to criticize.

I invested in VXUS since inception. At the time it made up 15% of my portfolio and before that held international in a Vanguard mutual fund. After 10 years I wasn't so sure I needed international exposure other than through VTI. Beyond diversification I thought companies were going more and more global and for better or worse U.S. companies seem more profit driven while U.S. workers take less vacations and work longer hours. Again, not a good thing but a reality.

I don't know if I'm right or wrong, but a lower exposure has helped my portfolio. I still have about 5 or 6% in VXUS just because who knows, but I'm comfortable holding VTI or the equivalent along with 40% or so fixed income funds like BND, a total Bond fund. Time will tell, but over the past 11 years an investment in VTI has done ridiculously better.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by dbr »

Two things:

1. If you are paying someone for an investment plan they should also be able to explain to your satisfaction why the plan is what it is. If that doesn't happen then either you haven't made sure they have delivered what they should or they aren't giving you everything you paid for. Vanguard has published more than one paper or article documenting their thinking about international stocks. Your advisor at Vanguard should able to link you to those.

2. If for whatever reason, good or bad, you disagree with the plan and they won't change it, then you should go elsewhere. Making your own choices is a very doable alternative.

Otherwise here is a search on the discussion of this issue here (39,300 posts): https://www.google.com/search?sitesearc ... nal+stocks

A warning is that this question remains violently unresolved on this forum (depending on whose opinion you honor).

On the off chance you want me to suggest what to do, I suggest you hold 30% of your stocks portfolio wide in VXUS or similar and plan on doing so for the long term, long term being 30-60 years, matching a person's typical investing lifetime.

Disclaimer: I have some in VXUS but not that much and doing anything about it is somewhere around item 39 on a list of 10.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by jibantik »

greek-yogurt wrote: Tue Sep 22, 2020 6:32 pm ...

Why do I dislike this VXUS fund so much and why is the performance of it so very bad? I do not like having my second largest holding being this VXUS and it get destroyed by even the most basic index fund.

I don't mean to come off as crass, I just really dislike this fund and am second guessing the switchover I did to the managed and having a huge chunk of my Roth being in this VXUS fund.

Am I being unreasonable?
Yes. Performance chasing is NEVER reasonable. Unfortunately it's a tempting mistress for a lot of people, even on this forum, sadly.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by burritoLover »

Pick something reasonable and stick with it for decades without changing anything. If that's 0% international - so be it, just don't go changing when U.S. underperforms, even if it underperforms for many years.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by jibantik »

lostdog wrote: Wed Sep 23, 2020 4:43 pm
greek-yogurt wrote: Wed Sep 23, 2020 4:00 pm Snide and unnecessary remarks about TSLA and NFLX aside, thanks to most for the good feedback.

I meant "investor IQ" as in moderately high understanding of investments and working to pay my future self and hit my goals, not the overall IQ. I am very moronic and idiotic on many topics, politics being one of them.

I have 12 months of liquid, maxing 401K, maxing Roth, pumping bi weekly into the taxable borkerage (managed and non managed) as I'm able to.

I put just about everything I can into the markets to maximize dollar cost averaging and am not really giving much of a sh*t about the recent performance or the down day today or new waves of the COVID. Thanks for the thoughts on this VXUS fund. I will likely call Vanguard and see if I can reduce that holding, if not remove it altogether, or replace it with VWILX or move half of it to VWILX.

Thank you, all. Be good.
Moving to international growth reeks of performance chasing.

To each their own but it's a mistake to sell low and buy high. I would call it "low IQ" investing.

Answer this seriously please...What are you going to do if VXUS outperforms for a few years? Switch back?
B... Bu... But it won't! We have Boglehead™ secrets here that aren't priced in the market already. Don't you know the US is the only country with regulations and a legal system and... and... France takes hour long lunch breaks for crying out loud!
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by MotoTrojan »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm
On paper only of course, VIGAX has absolutely CRUSHED VXUS.

You cannot argue with what 10K invested in each have actually returned over the last 10 years, which is:

10y 10K into VIGAX is now $54.5K
10y 10K into VXUS is now $13.5K

This is not "performance chasing" but the observations of a moderately high IQ investor who is questioning international holdings. I am sure there are many people who choose not to invest in ANY international? The performance of VXUS is just NOT good, regardless of how well it is managed. I am not trying to be combative or argumentative.
Your investor-IQ (no comment on overall IQ) is actually moderately sub-par in my humble opinion. You can't go back in time, why do you think what has done well the last 10-years will do well the next 10-years?

If VIGAX is truly such a superior investment, wouldn't investors flock to it until expected superior premium was completely eaten away, and then they would have equal returns? It is naïve to think it will continue simply because it was the case in the (recent) past.

Good luck with your performance chasing; not sure how you could call it anything else.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by zlandar »

If you don't agree with the investment plan then come up with your own plan. It needs to be a plan you stick to though because otherwise you are just chasing performance.

Bogle didn't have any international funds. One of his major points is that many large US corporations have half their revenue outside the US.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Que1999 »

Why do these International or Not threads always devolve into snide, snarky, nasty conversations... It's so unnecessary and unproductive.

I don't invest internationally... It's a personal decision based on primarily (3) factors:

1- As a US investor, I pay lower expenses/fees by investing domestically as opposed to internationally.
2- As a US investor, I pay less taxes investing domestically vs. investing internationally.
3- Our world is more interconnected and global, economically and otherwise, than it's ever been before. US companies (and vice-versa) are all over the world. It is my personal belief that this fact reduces/negates the diversification benefits that international investing provides, especially once you factor in the more favorable fee/tax rates cited above.

For those three reasons, I don't invest internationally. No need to be rude or snide, it is what it is and we all need to come to our own conclusions.... Cheers and good luck!
:sharebeer
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by MotoTrojan »

greek-yogurt wrote: Wed Sep 23, 2020 1:09 pm

The holdings consist of BND, BNDX, VXUS, VTV, VFX, VMVAX, VPMAX,VSIAX, VTMGX and all those holdings are weighted at the percentages Vanguard chose. I gave them full control of it all as of ~45 days ago.
Not sure what the percentages are but regardless, this portfolio is more complicated than it needs to be but I presume they are doing that to make it appear as though they are worth the cost. There is a lot of overlap (VTMGX and VXUS are quite similar, not sure why you'd hold both unless it has to do with tax-loss harvesting) but overall I like what they are doing and would wager this will beat VTI and certainly VIGAX over the next decade, but only time will tell.

I think you could simplify this quite a bit and maintain near-identical exposure by just holding an allocation of BND, VXUS, VTI, and VBR.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by MotoTrojan »

Que1999 wrote: Thu Sep 24, 2020 11:14 am Why do these International or Not threads always devolve into snide, snarky, nasty conversations... It's so unnecessary and unproductive.

I don't invest internationally... It's a personal decision based on primarily (3) factors:

1- As a US investor, I pay lower expenses/fees by investing domestically as opposed to internationally.
2- As a US investor, I pay less taxes investing domestically vs. investing internationally.
3- Our world is more interconnected and global, economically and otherwise, than it's ever been before. US companies (and vice-versa) are all over the world. It is my personal belief that this fact reduces/negates the diversification benefits that international investing provides, especially once you factor in the more favorable fee/tax rates cited above.

For those three reasons, I don't invest internationally. No need to be rude or snide, it is what it is and we all need to come to our own conclusions.... Cheers and good luck!
:sharebeer
If ex-US had outperformed the US by 1% for the last 30 years, would you have still come to this conclusion? If so, then good for you. If not, then I think you are being dishonest with us (and even yourself) and just using a narrative to justify your performance chasing. Nothing wrong with that.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by tibbitts »

burritoLover wrote: Thu Sep 24, 2020 11:05 am Pick something reasonable and stick with it for decades without changing anything. If that's 0% international - so be it, just don't go changing when U.S. underperforms, even if it underperforms for many years.
That's something that I'm appreciating more as time goes on, and definitely applies to value/growth tilting or domestic/international. Too many Bogleheads seem to not realize that once they've chosen a strategy, they really can't change it.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by abuss368 »

snailderby wrote: Tue Sep 22, 2020 6:49 pm Welcome to the forum!

Why hold international? See this graphic:

Image

Or check out past threads on this. Whether to hold international stocks (and if so, how much) is a frequently-debated topic on this forum. See, e.g., viewtopic.php?t=196956, viewtopic.php?t=255757, viewtopic.php?t=256423, or viewtopic.php?t=318974.

Some Bogleheads don't hold any international stocks. Taylor Larimore recommends 20% in international stocks. Vanguard's target-date funds currently have 40% in international stocks. Other Bogleheads prefer to hold international stocks at market weight.
That is one way of looking at it. Another way is the cumulative results over 35 years. Those results are not even close in terms of performance. US is much much higher than international which is much riskier.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by abuss368 »

lostdog wrote: Tue Sep 22, 2020 9:15 pm Go ahead and dump.
If someone is not comfortable and up at night I would agree with this advice.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by abuss368 »

vineviz wrote: Tue Sep 22, 2020 6:54 pm
greek-yogurt wrote: Tue Sep 22, 2020 6:32 pm Am I being unreasonable?
Probably.

VXUS is one of the best-managed, low-cost international equity index funds available. Whatever motivated you to move invest with Vanguard to begin with, that reason is the reason that Vanguard is a reasonable core holding for you.
I would agree that while the past performance has not been good, no one knows what the future may bring.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by Que1999 »

MotoTrojan wrote: Thu Sep 24, 2020 11:19 am
Que1999 wrote: Thu Sep 24, 2020 11:14 am Why do these International or Not threads always devolve into snide, snarky, nasty conversations... It's so unnecessary and unproductive.

I don't invest internationally... It's a personal decision based on primarily (3) factors:

1- As a US investor, I pay lower expenses/fees by investing domestically as opposed to internationally.
2- As a US investor, I pay less taxes investing domestically vs. investing internationally.
3- Our world is more interconnected and global, economically and otherwise, than it's ever been before. US companies (and vice-versa) are all over the world. It is my personal belief that this fact reduces/negates the diversification benefits that international investing provides, especially once you factor in the more favorable fee/tax rates cited above.

For those three reasons, I don't invest internationally. No need to be rude or snide, it is what it is and we all need to come to our own conclusions.... Cheers and good luck!
:sharebeer
If ex-US had outperformed the US by 1% for the last 30 years, would you have still come to this conclusion? If so, then good for you. If not, then I think you are being dishonest with us (and even yourself) and just using a narrative to justify your performance chasing. Nothing wrong with that.
Performance, past or otherwise was never mentioned in my post... So not sure why you're asking about a make-believe performance rate over the past 30 years? Anyways, those three reasons are why I invest domestically vs. internationally. They are factual reasons. It has zero to do with past performance. The world today is so drastically different than it was 30 years ago, you can't compare the two IMO...
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by index245 »

I've held international for a long time, but I wonder if a "total international" index is the best vehicle to do so. It provides diversification(*), but it seems that long term good returns are difficult to see given the diversity of regions and countries it encompasses. The regions that are doing well internationally (ie New Zealand) get overwhelmed by those that aren't or are stagnant long term (ie Japan) and a much larger market cap.

Is a multi-region or country approach better? Or a factor approach (such as those who use a value tile to their international investments)? I don't know the answer, but something has to make more money while keeping diversification. Developed Markets indexes peaked in the 1990's. Many of you were born then.

*The diversification angle is a little tough, too, given the high correlation between developed and US markets. If US markets go into a long term slump (as has happened), will international thrive? Nobody knows.
Last edited by index245 on Thu Sep 24, 2020 12:04 pm, edited 1 time in total.
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Re: VXUS - Why? [Vanguard Total International Stock ETF]

Post by MotoTrojan »

Que1999 wrote: Thu Sep 24, 2020 11:48 am
MotoTrojan wrote: Thu Sep 24, 2020 11:19 am
Que1999 wrote: Thu Sep 24, 2020 11:14 am Why do these International or Not threads always devolve into snide, snarky, nasty conversations... It's so unnecessary and unproductive.

I don't invest internationally... It's a personal decision based on primarily (3) factors:

1- As a US investor, I pay lower expenses/fees by investing domestically as opposed to internationally.
2- As a US investor, I pay less taxes investing domestically vs. investing internationally.
3- Our world is more interconnected and global, economically and otherwise, than it's ever been before. US companies (and vice-versa) are all over the world. It is my personal belief that this fact reduces/negates the diversification benefits that international investing provides, especially once you factor in the more favorable fee/tax rates cited above.

For those three reasons, I don't invest internationally. No need to be rude or snide, it is what it is and we all need to come to our own conclusions.... Cheers and good luck!
:sharebeer
If ex-US had outperformed the US by 1% for the last 30 years, would you have still come to this conclusion? If so, then good for you. If not, then I think you are being dishonest with us (and even yourself) and just using a narrative to justify your performance chasing. Nothing wrong with that.
Performance, past or otherwise was never mentioned in my post... So not sure why you're asking about a make-believe performance rate over the past 30 years? Anyways, those three reasons are why I invest domestically vs. internationally. They are factual reasons. It has zero to do with past performance. The world today is so drastically different than it was 30 years ago, you can't compare the two IMO...
Awesome. If that is the case, good for you and glad you have a system you like. I was simply questioning how honest you were being with us (and yourself) about what impact past returns played in your decision.
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