Vanguard Emerging markets at 10%
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Vanguard Emerging markets at 10%
Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Re: Vanguard Emerging markets at 10%
What secret do you pair know that the rest of the market does not... but will after you buy?
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Re: Vanguard Emerging markets at 10%
If so, maybe shift 10% US to 10% emerging since US is more richly valued. Then again maybe it’s richly valued for a reason.
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Re: Vanguard Emerging markets at 10%
EM stocks aren't that cheap relative to Developed International -- it's just that the US PE is really high.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Frontier markets, on the other hand, are about 23% cheaper than EM.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: Vanguard Emerging markets at 10%
I'm just guessing since I haven't read much from him lately but Jeremy Grantham's idea of what constitutes emerging market equities and yours might not coincide. Not that I'm saying it will necessarily matter but it's not as simple as saying, for example, "total U.S. market."DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Re: Vanguard Emerging markets at 10%
Mr. Bogle frequently recommended that if U.S. investors felt they needed an "international" allocation, they should limit it to 20%.
Interestingly he sometimes suggested that 20% be half in developed, and half in emerging markets.
Interestingly he sometimes suggested that 20% be half in developed, and half in emerging markets.
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Re: Vanguard Emerging markets at 10%
I dislike the name. It should be undeveloped markets because we don't know if they'll emerge or not. International as a chunk of my portfolio is good enough for me.
Re: Vanguard Emerging markets at 10%
"Developing Markets" is another term.
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Re: Vanguard Emerging markets at 10%
Vanguard's Emerging Markets Stock Index Fund (VEMAX) has the following country allocations:
40.9% China
17.7% Taiwan
12.1% India
5.2% Brazil
4.4% South Africa
3.2% Saudi Arabia
2.8% Russia
13.7% Everybody else
If you're comfortable with tilting towards these countries, go for it. I am not.
40.9% China
17.7% Taiwan
12.1% India
5.2% Brazil
4.4% South Africa
3.2% Saudi Arabia
2.8% Russia
13.7% Everybody else
If you're comfortable with tilting towards these countries, go for it. I am not.
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Re: Vanguard Emerging markets at 10%
How much EM do you already have in that 30% Int'l? And do you mean 10% MORE or to bring it to a total of 10%.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm (currently 70% US and 30% international with 10% small value tilt)
Re: Vanguard Emerging markets at 10%
You may already be close to 10% in EM. If you use a Total International ETF like VXUS, 25.70% is allocated to EM. 30% x 25.70% = 7.7% of your total portfolio is in EM today. Will 2.3% make a difference?
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Re: Vanguard Emerging markets at 10%
What are you using for the current 30% international?DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Regards,
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Re: Vanguard Emerging markets at 10%
Emerging market is highly volatile. If you can tolerate volatility, 10% in emerging market could be rewarding...Emerging markets have higher growth potential.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Roughly half of my equities are in total international. Vanguard total international holds about 20% in emerging market. 20% of half is 10% of whole portfolio. I hold about 10% in emerging market...Not all my international eggs are in one basket. But, emerging holding is pretty much like what Vanguard holds in vanguard total international fund.
Edit: Vanguard total international used to hold about 20% in emerging market. Now it is holding about 26% as of 3/31/2021. Thus, my emerging market holding is more than 10% of the total portfolio.
Last edited by Metsfan91 on Thu May 06, 2021 8:35 pm, edited 1 time in total.
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Re: Vanguard Emerging markets at 10%
Not worth complicating your portfolio by splitting out EM, in my opinion, especially since it’s only 10%. If you are intent on making a change because you fear elevated US equity valuations, probably would be simpler to just bump your SCV position to 15 or 20%.
Or you could just do nothing and tune out the noise. That’s okay too, since 30% international / 10% SCV is a decently diversified portfolio as-is.
Or you could just do nothing and tune out the noise. That’s okay too, since 30% international / 10% SCV is a decently diversified portfolio as-is.
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Re: Vanguard Emerging markets at 10%
How would you recommend investing in frontier markets? Guessing this wouldn't be thru a vanguard fund/etfwatchnerd wrote: ↑Wed May 05, 2021 8:57 pmEM stocks aren't that cheap relative to Developed International -- it's just that the US PE is really high.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Frontier markets, on the other hand, are about 23% cheaper than EM.
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Re: Vanguard Emerging markets at 10%
As far as I can tell, there is only one frontier markets ETF: https://www.etf.com/FM. (Invesco's frontier markets ETF was closed last year.) I suppose you could also consider something like EMFM, which combines emerging and frontier markets: https://www.etf.com/EMFM.Wannaretireearly wrote: ↑Wed May 05, 2021 11:29 pmHow would you recommend investing in frontier markets? Guessing this wouldn't be thru a vanguard fund/etfwatchnerd wrote: ↑Wed May 05, 2021 8:57 pmEM stocks aren't that cheap relative to Developed International -- it's just that the US PE is really high.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Frontier markets, on the other hand, are about 23% cheaper than EM.
There are the haves, have-nots, and have-yachts.
Re: Vanguard Emerging markets at 10%
10% EM is just about the capitalization weighted allocation.
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Re: Vanguard Emerging markets at 10%
Your current EM exposure is: 30% * 25% = 7.5%DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
If you go for 70%/20%/10%, it will be 20% * 25% + 10% = 15%.
Currently you are underweighting emerging (relative to market caps) by 2.5%. After the change you would overweighting it by 5%.
Effectively overweighting EM is betting on China.
How that will turn out... nobody knows. Potential is huge, but there are many kind of risks (including political).
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
Re: Vanguard Emerging markets at 10%
52% financials? I think that's a pass for me, as that seems too ripe for dubious activity. Even if I grant that bringing financial services to the unbanked is potentially lucrative, I somehow don't think that National Bank of Kuwait is where I'd focus my dollars! I guess it could be telling me that there simply is no reasonable float to invest in a broader base of sectors?Huygens wrote: ↑Wed May 05, 2021 11:34 pm As far as I can tell, there is only one frontier markets ETF: https://www.etf.com/FM. (Invesco's frontier markets ETF was closed last year.) I suppose you could also consider something like EMFM, which combines emerging and frontier markets: https://www.etf.com/EMFM.
Re: Vanguard Emerging markets at 10%
Who knows, maybe one day VWO will overtake its 2007 level?
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Re: Vanguard Emerging markets at 10%
Yep, I have emerging markets at 10% as well. I guess the question is at which point does China cease being a (large) part of EM?
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Re: Vanguard Emerging markets at 10%
1) What are you holding now as your 30%? The Vanguard Total International Stock Market Index Fund is currently 25% emerging markets, so you are already at 7.5% emerging markets.
2) Your stated reason is that the idea "just makes me feel a little better." "
Time is your friend, impulse is your enemy"--John C. Bogle. Why are you doing this now? Why not long ago?
Did you read something by Grantham and feel an impulse to change your plan? Why didn't you do it long ago, since Grantham began making rosy forecasts for emerging markets long ago?
3) "Based on Jeremy Grantham"... Have you checked the accuracy of GMO's previous forecasts?
Copying from this posting,
we see that in 2010 GMO forecasted that
And the GMO forecasts are noise.
2) Your stated reason is that the idea "just makes me feel a little better." "
Time is your friend, impulse is your enemy"--John C. Bogle. Why are you doing this now? Why not long ago?
Did you read something by Grantham and feel an impulse to change your plan? Why didn't you do it long ago, since Grantham began making rosy forecasts for emerging markets long ago?
3) "Based on Jeremy Grantham"... Have you checked the accuracy of GMO's previous forecasts?
Copying from this posting,
we see that in 2010 GMO forecasted that
- Emerging markets would be the best-performing stock category and would average 7.6% annualized
- US large caps would be the second worst and would average only 2.7%.
- US large caps were the best-performing stock category, averaging 13.2%
- Emerging markets were the worst, returning 0.7%
And the GMO forecasts are noise.
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Re: Vanguard Emerging markets at 10%
I use the iShares FM ETF.Wannaretireearly wrote: ↑Wed May 05, 2021 11:29 pm
How would you recommend investing in frontier markets? Guessing this wouldn't be thru a vanguard fund/etf
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Re: Vanguard Emerging markets at 10%
When clients ask me about portfolio changes, I'm less concerned about the particular proposed allocation change as I am about the act of changing a portfolio.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
If they green light this portfolio now, what about future portfolio changes? If, next week, they feel that inflation is a factor for your fixed income return, will they decide to increase your position to TIPS? What about the week after that, when they feel that real estate is overvalued and want to decrease exposure to REITs?
Much more important than a particular allocation is sticking with a particular allocation.
Consider, does it really make sense to make this change? Is this change really going to make a difference in long-term investing experience?
More importantly, what system or guidelines do they have in place to keep them committed to their existing allocation? Do they have an investment policy statement? If so, it may make sense to review it now. If not, it probably makes sense to create one.
I hope that helps.
EDIT: For clarity.
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Re: Vanguard Emerging markets at 10%
I agree. As I've said earlier, I was surprised by the concentration of the fund and relatively small country exposure.shess wrote: ↑Thu May 06, 2021 1:40 am52% financials? I think that's a pass for me, as that seems too ripe for dubious activity. Even if I grant that bringing financial services to the unbanked is potentially lucrative, I somehow don't think that National Bank of Kuwait is where I'd focus my dollars! I guess it could be telling me that there simply is no reasonable float to invest in a broader base of sectors?Huygens wrote: ↑Wed May 05, 2021 11:34 pm As far as I can tell, there is only one frontier markets ETF: https://www.etf.com/FM. (Invesco's frontier markets ETF was closed last year.) I suppose you could also consider something like EMFM, which combines emerging and frontier markets: https://www.etf.com/EMFM.
There are the haves, have-nots, and have-yachts.
Re: Vanguard Emerging markets at 10%
Well, in the MSCI world, Frontier Markets are only 0.4% of the global stock market cap.
So a pretty small group.
I hold FM at about market weight.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: Vanguard Emerging markets at 10%
They'd have to relax capital controls.stimulacra wrote: ↑Thu May 06, 2021 2:03 am Yep, I have emerging markets at 10% as well. I guess the question is at which point does China cease being a (large) part of EM?
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Re: Vanguard Emerging markets at 10%
I think if you are investing in index funds you should not look at domicile as majority (70-80%) of index invests in large cap companies which tend to be multi-nationals. Seeing the revenue exposure of MSCI ACWI there is 42% exposure to Emerging Economies. This is much bigger than the proposed 10% allocation to EM stocks of 30% International that you want to do ie 3% allocation to EM stocks. If you want this exposure to Emerging Economies than buy VT. For comparison MSCI North America has 14% exposure to Emerging Economies.
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Re: Vanguard Emerging markets at 10%
I just hold global market caps in stocks.Anon9001 wrote: ↑Thu May 06, 2021 10:03 am I think if you are investing in index funds you should not look at domicile as majority (70-80%) of index invests in large cap companies which tend to be multi-nationals. Seeing the revenue exposure of MSCI ACWI there is 42% exposure to Emerging Economies. This is much bigger than the proposed 10% allocation to EM stocks of 30% International that you want to do ie 3% allocation to EM stocks. If you want this exposure to Emerging Economies than buy VT. For comparison MSCI North America has 14% exposure to Emerging Economies.
Then I don't have to worry about these ratios.
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Re: Vanguard Emerging markets at 10%
Are you sure your desire to increase emerging markets isn't just based on recent performance?DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Paul
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Re: Vanguard Emerging markets at 10%
Why are you only looking at price? According to Portfolio Visualizer, $10,000 invested in VWO on Jan 1, 2007, has grown to $19,750 as of Apr 30. That’s +97.5% for a CAGR of 4.85% with dividends reinvested. That’s not as good as US, but it’s not the zero return you imply.
You’re also ignoring the 2:1 split it did in 2008.
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Re: Vanguard Emerging markets at 10%
Now that you show it like that, makes me ever more likely to split, maybe even half. How does China and Taiwan not look like a good long term investment? Brazil, India?UpperNwGuy wrote: ↑Wed May 05, 2021 9:59 pm Vanguard's Emerging Markets Stock Index Fund (VEMAX) has the following country allocations:
40.9% China
17.7% Taiwan
12.1% India
5.2% Brazil
4.4% South Africa
3.2% Saudi Arabia
2.8% Russia
13.7% Everybody else
If you're comfortable with tilting towards these countries, go for it. I am not.
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Re: Vanguard Emerging markets at 10%
Good question, I assume emerging markets is about 20% of total international or so. So that would be 6% as it stands today. Correct me if I am wrong please.TropikThunder wrote: ↑Wed May 05, 2021 10:52 pmHow much EM do you already have in that 30% Int'l? And do you mean 10% MORE or to bring it to a total of 10%.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm (currently 70% US and 30% international with 10% small value tilt)
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Re: Vanguard Emerging markets at 10%
Its in the total international vanguard mutual fund. Should be the same, no?
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Re: Vanguard Emerging markets at 10%
Very good summary! I noticed all you fixed income is EE and ibonds, is this due to avoidance of interest rate risk?ivgrivchuck wrote: ↑Thu May 06, 2021 1:38 amYour current EM exposure is: 30% * 25% = 7.5%DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
If you go for 70%/20%/10%, it will be 20% * 25% + 10% = 15%.
Currently you are underweighting emerging (relative to market caps) by 2.5%. After the change you would overweighting it by 5%.
Effectively overweighting EM is betting on China.
How that will turn out... nobody knows. Potential is huge, but there are many kind of risks (including political).
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Re: Vanguard Emerging markets at 10%
nisiprius wrote: ↑Thu May 06, 2021 7:00 am 1) What are you holding now as your 30%? The Vanguard Total International Stock Market Index Fund is currently 25% emerging markets, so you are already at 7.5% emerging markets.
2) Your stated reason is that the idea "just makes me feel a little better." "
Time is your friend, impulse is your enemy"--John C. Bogle. Why are you doing this now? Why not long ago?
Did you read something by Grantham and feel an impulse to change your plan? Why didn't you do it long ago, since Grantham began making rosy forecasts for emerging markets long ago?
3) "Based on Jeremy Grantham"... Have you checked the accuracy of GMO's previous forecasts?
Copying from this posting,
we see that in 2010 GMO forecasted thatOver the time period of the forecast, what really happend was that
- Emerging markets would be the best-performing stock category and would average 7.6% annualized
- US large caps would be the second worst and would average only 2.7%.
Tune out the noise.
- US large caps were the best-performing stock category, averaging 13.2%
- Emerging markets were the worst, returning 0.7%
And the GMO forecasts are noise.
Good advice! I just looked, actually closer to 26% emerging markets in tot int index fund (VTIAX).
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Re: Vanguard Emerging markets at 10%
Excellent advice!!! I do have a IPS, says I wait 3 months to change investment. So as i wait figured I would ask. Great advice all around!JonL wrote: ↑Thu May 06, 2021 9:02 amWhen clients ask me about portfolio changes, I'm less concerned about the particular proposed allocation change as I am about the act of changing a portfolio.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
If they green light this portfolio now, what about future portfolio changes? If, next week, they feel that inflation is a factor for your fixed income return, will they decide to increase your position to TIPS? What about the week after that, when they feel that real estate is overvalued and want to decrease exposure to REITs?
Much more important than a particular allocation is sticking with a particular allocation.
Consider, does it really make sense to make this change? Is this change really going to make a difference in long-term investing experience?
More importantly, what system or guidelines do they have in place to keep them committed to their existing allocation? Do they have an investment policy statement? If so, it may make sense to review it now. If not, it probably makes sense to create one.
I hope that helps.
EDIT: For clarity.
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Re: Vanguard Emerging markets at 10%
Here's fact to be aware of... not to see patterns in and try to extrapolate them, but to be aware of.
It doesn't point in any particular direction. But it's a thing to know. It's a thing to know particularly when people are talking about emerging markets performance and not explaining their choice of starting point.
Over the lifetime of Vanguard Emerging Market Index Fund, we can roughly summarize it as including three periods:
1994-2003, emerging markets was roughly flat
2003-2008, emerging markets had a spectacular burst of growth, far outperforming US stocks
2008-present, emerging markets was roughly flat
A bad period, a good period, and a bad period. Three periods.
What you see for past performance basically depends on which periods it included. If your time period includes two bad and one good, you'll see emerging markets as having underperformed. If it includes one of each, it it's about the same as the US. But if you only look at 2003-2008, emerging markets was stunning.
2003-2008 was so stunning that if two investors started on 3/2008, one in EM and one in US stocks, the EM investor would have pulled so far ahead that fifteen years later the US investor would still not have caught up.
Source
Since inception of the Vanguard Emerging Markets Index Fund--Emerging Markets, blue; US, orange:
Since 3/1/2003:
Since start of 2010:
It doesn't point in any particular direction. But it's a thing to know. It's a thing to know particularly when people are talking about emerging markets performance and not explaining their choice of starting point.
Over the lifetime of Vanguard Emerging Market Index Fund, we can roughly summarize it as including three periods:
1994-2003, emerging markets was roughly flat
2003-2008, emerging markets had a spectacular burst of growth, far outperforming US stocks
2008-present, emerging markets was roughly flat
A bad period, a good period, and a bad period. Three periods.
What you see for past performance basically depends on which periods it included. If your time period includes two bad and one good, you'll see emerging markets as having underperformed. If it includes one of each, it it's about the same as the US. But if you only look at 2003-2008, emerging markets was stunning.
2003-2008 was so stunning that if two investors started on 3/2008, one in EM and one in US stocks, the EM investor would have pulled so far ahead that fifteen years later the US investor would still not have caught up.
Source
Since inception of the Vanguard Emerging Markets Index Fund--Emerging Markets, blue; US, orange:
Since 3/1/2003:
Since start of 2010:
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Re: Vanguard Emerging markets at 10%
I made a mistake and was in EM (around 35%) during the 'lost decade '. Although, I benefitted from my allocation between 2005-2007,I learned to be more cautious about those markets.TropikThunder wrote: ↑Thu May 06, 2021 1:37 pmWhy are you only looking at price? According to Portfolio Visualizer, $10,000 invested in VWO on Jan 1, 2007, has grown to $19,750 as of Apr 30. That’s +97.5% for a CAGR of 4.85% with dividends reinvested. That’s not as good as US, but it’s not the zero return you imply.
You’re also ignoring the 2:1 split it did in 2008.
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Re: Vanguard Emerging markets at 10%
Best rates with the least risk. An easy choice.DesertInvestor wrote: ↑Thu May 06, 2021 4:49 pm
Very good summary! I noticed all you fixed income is EE and ibonds, is this due to avoidance of interest rate risk?
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Re: Vanguard Emerging markets at 10%
Valuations also reflect a risk premium discounted in. How do you distinguish FM being cheaper from FM being priced to reflect its greater risk?watchnerd wrote: ↑Wed May 05, 2021 8:57 pmEM stocks aren't that cheap relative to Developed International -- it's just that the US PE is really high.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Frontier markets, on the other hand, are about 23% cheaper than EM.
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Re: Vanguard Emerging markets at 10%
Jeremy Grantham's predictions and recommendations are not input parameters to my investing strategy.DesertInvestor wrote: ↑Wed May 05, 2021 8:44 pm Hi,
Based on Jermey Grantham and current emerging market PE compared to US ect thinking about shifting 10% of international to emerging markets (currently 70% US and 30% international with 10% small value tilt). Slightly more complicated portfolio, but just makes me feel a little better continuing to contribute. Wondering how people feel about this?
Re: Vanguard Emerging markets at 10%
Under EMH, I don't need to have an opinion on this.Northern Flicker wrote: ↑Thu May 06, 2021 11:23 pm
Valuations also reflect a risk premium discounted in. How do you distinguish FM being cheaper from FM being priced to reflect its greater risk?
Valuations are lower in FM than EM because the market thinks they should be, for whatever reason.
I do not invest in FM because I think it will outperform.
I don't expect any region to outperform.
I invest in FM because it's part of the total global market, and so I hold it at market weight.
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Re: Vanguard Emerging markets at 10%
The countries in the MSCI Frontier Markets index.
https://www.msci.com/documents/10199/f9 ... 0848afe026
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Re: Vanguard Emerging markets at 10%
It makes me feel philosophically satisfied.absolute zero wrote: ↑Fri May 07, 2021 6:45 amIf your FM holding is less than 1% of your portfolio, I suspect you invest in FM for fun more than anything else.
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Re: Vanguard Emerging markets at 10%
It's a euphemism. Other commonly used terms that are euphemisms are "emerging markets," "high-yield bonds."
"Emerging markets" means "economically less developed countries." Instead of saying these are countries with less-developed economies, the term suggests that they are all "emerging," on the way up, and destined to become developed markets.
"Frontier markets" means countries whose markets are not even "emerging." Wikipedia says they are sometimes called "pre-emerging markets," but are so far from being developed that they are not likely to be come developed markets any time soon.
I don't know what the justification for the term "frontier" is. Perhaps it means that it is on the extreme outer limits of exploration by bold pioneering investors.
Note that calculating total market size from MSCI indexes, the total cap weight
for MSCI Frontier Markets, 79 constituents x $997.4 million average market cap per constitution = $0.079 trillion.
For emerging markets, 1,391 x 5,292.32 / 85% = $8.7 trillion
For the MSCI ACWI total world, 2,974 x 21,677.67 / 85% = $76 trillion
So frontier markets represent about 0.1% of the total of all global stock markets, and not having them in one's portfolio is not a serious omission. The way they are mentioned in the same breath... developed markets, emerging markets, frontier markets... gives them a mental weight out of proportion to their financial weight.
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Re: Vanguard Emerging markets at 10%
+1finite_difference wrote: ↑Wed May 05, 2021 8:55 pm If so, maybe shift 10% US to 10% emerging since US is more richly valued. Then again maybe it’s richly valued for a reason.
Global stocks, US bonds, and time.
Re: Vanguard Emerging markets at 10%
I use VXUS and AVEM to tilt EM to get to 10%.
not because of that looney grantham though.
not because of that looney grantham though.