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International Large Value

Posted: Thu Sep 10, 2009 12:48 pm
by InvestingMom
Hi all,

I am rebalancing my portfolio and would like to simplify it at the same time. Last year with so much TLHing I ended up with a couple of International Large Value funds in my taxable account (401K is maxed with bonds). For the most part both of the funds have small gains/losses and in any case with the losses I accumulated from last year any gains would easily be offset with my carryover.

So....my question is, all things being equal which fund/ETF would you choose:

Vanguard International Value Fund (VTRIX)
Dodge and Cox International* (DODFX)
I-Shares MSCI EAFE Value Index (EFV)

*I realize that this fund is not classified as value anymore, but when I did a morningstar Xray it still leans towards value.

I would really like to go with an index fund....but I own the DODFX and VTRIX and for some reason I just can't seem to pull the trigger. They both look like they perform better than the ETF (over 3 years). I know that past performance blah blah blah. But I would feel stupid to move to the ETF just to simplify and have it under perform these 2 funds. Any insight would be greatly appreciated.

Investingmom

Posted: Thu Sep 10, 2009 12:56 pm
by Wagnerjb
I prefer the lower costs and lack of manager risk that you get in passive funds. Thus, I own EFV.

Best wishes.

Posted: Thu Sep 10, 2009 1:01 pm
by baw703916
Hi Investingmom,

VTRIX does not have a good record for tax efficiency (several sizable capital gains distributions in recent years). It may be better for the next several years, thanks to a large loss carryforward from 2008, but in the long run actively managed funds w/o ETF shares tend to not be tax efficient.

I'm not sure about D&C's tax efficiency, but in a taxable account I would definitely not recommend VTRIX.

EFV doesn't thrill me, particularly, for one thing it ends up having a overly large weighting to financials. But I think it's the best choice (I own it myself).

Best wishes,
Brad

Posted: Thu Sep 10, 2009 1:44 pm
by InvestingMom
Thanks for your input. Good points.

And yes, it seems obvious now that you said it Brad that the ETF would be more tax efficient. Now to get off my butt and do it (need to look at the fall distributions though before I do anything!)

Thanks again,
Investingmom

Posted: Thu Sep 10, 2009 6:15 pm
by mikep
EFV does not contain any emerging market exposure like VTRIX.. if you want EM exposure you may need an additional fund.

As for financials, they are value out of favor stocks... this is what you get.

Posted: Thu Sep 10, 2009 6:40 pm
by Opponent Process
DODFX also benefits from emerging markets.

tough call, actually they are all really good options. DODFX takes a lot of additional risk to get added returns (although they're pretty good at it). I personally wouldn't worry about regret with EFV, though.

Posted: Thu Sep 10, 2009 6:56 pm
by dkdoy
I own Dodge and Cox and have overall been very happy with them. Very good management, with low expense ratios. Also the fact that they do not have a marketing dept and make every attempt to keep costs down is something that I like. Other than buying index DODFX is hard to beat. I also like the emerging market exposure. Great management team with a very long tenure with company another plus..

Posted: Fri Sep 11, 2009 10:33 am
by InvestingMom
Thanks for the additional input. That is good to know that EFV doesn't contain emerging markets and may explain the difference in the 3 year returns as compared to the other 2 funds. It helps to compare apples to apples!

Posted: Fri Sep 11, 2009 10:40 am
by fishndoc
EFV does not contain any emerging market exposure like VTRIX.. if you want EM exposure you may need an additional fund.
For me, this is a positive, as it makes it easier to rebalance and maintain my target EM allocation using EM-only funds.

Wayne

Posted: Fri Sep 11, 2009 11:28 am
by InvestingMom
fishndoc wrote:
EFV does not contain any emerging market exposure like VTRIX.. if you want EM exposure you may need an additional fund.
For me, this is a positive, as it makes it easier to rebalance and maintain my target EM allocation using EM-only funds.

Wayne
Good point. I actually own Emerging markets already and so i was thinking maybe I should keep Dodfx after all and get rid of Emerging Markets to help meet my goal of simplifying. But if you are a slice and dicer, (and have taxable accounts where you may need to TLH) consolidating funds might make it less simple.

Anyway, I have pretty much concluded I should switch to EFV because of the tax efficiency and keep my Emerging fund. If the market keeps up though, the gains on the funds I am selling are going to be higher than anticipated! I was lazy and did not rebalance when losses were bigger...oh well...