International Small-Cap Fund/ETF

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walkinwood
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International Small-Cap Fund/ETF

Post by walkinwood » Sun Aug 21, 2011 9:58 am

I am thinking of further diversifying my international equity holdings by adding an International small-cap fund/ETF.

I tend to use Vg funds & VSS fits the bill.

Are there other International small-cap funds or ETFs I should consider? If you recommend, please help me understand the reasons for your choice.
Last edited by walkinwood on Sun Aug 21, 2011 12:52 pm, edited 1 time in total.

livesoft
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Post by livesoft » Sun Aug 21, 2011 10:49 am

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DaveS
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Post by DaveS » Sun Aug 21, 2011 1:04 pm

You could research all the funds, but I doubt you will beat VSS. Dave

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mhc
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Post by mhc » Sun Aug 21, 2011 1:44 pm

Livesoft,

if I understand your post correctly, you are saying VSS is the best choice.

The URL you listed shows VSS as the last choice.

Was the link just to show what else is out there, or a different opinion from yours, or something else?

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Post by livesoft » Sun Aug 21, 2011 2:02 pm

VSS is the best choice. The link shows what else is out there with some explanation of each. Just because the link shows VSS last means little. Did you read why it was listed last? Do you agree or disagree with that reason?
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Pacal
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Post by Pacal » Sun Aug 21, 2011 2:23 pm

I prefer and invest in VSS for three reasons:

I trust Vanguard and prefer to do business with them whenever feasible (which is almost always).

It has a very low expense ratio for an international small-cap fund.

It has exposure to emerging markets (26 %).

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Post by DaveS » Sun Aug 21, 2011 2:30 pm

Livesoft,

if I understand your post correctly, you are saying VSS is the best choice.

The URL you listed shows VSS as the last choice[/quote]

Yes. The reason is

VSS is not well endowed alphabetically.

natureexplorer
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Post by natureexplorer » Sun Aug 21, 2011 2:55 pm

Altruist Financial Advisors LLC wrote:VSS ... The index includes both developed and emerging markets stocks. The inclusion of emerging markets stocks is why this fund is rated poorly here.
In other words, they don't think anyone would want to hold foreign developed and emerging market small caps together and they believe they should be held separately. They are not a fan of broad index funds. Instead, they enjoy slicing and dicing the market into many asset classes.

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tc101
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Post by tc101 » Sun Aug 21, 2011 3:06 pm

I own VSS, but I am not sure I will buy any more because it is thinly traded and the buy/sell spread is usually .3% to .5%.

This page says it is only .26%, but whenever I have checked it has been higher.

https://advisors.vanguard.com/VGApp/iip ... daskspread

Does this spread seem like a problem to anyone else?
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natureexplorer
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Post by natureexplorer » Sun Aug 21, 2011 3:42 pm

tc101 wrote:Does this spread seem like a problem to anyone else?
Yes, I am wondering whether I will be able to sell it in 40 years.

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Post by livesoft » Sun Aug 21, 2011 4:42 pm

tc101 wrote:I own VSS, but I am not sure I will buy any more because it is thinly traded and the buy/sell spread is usually .3% to .5%.

This page says it is only .26%, but whenever I have checked it has been higher.

https://advisors.vanguard.com/VGApp/iip ... daskspread

Does this spread seem like a problem to anyone else?
Recently, when I have bought it, the spread has been about 2 cents to 5 cents. The volume has improved. I guess a trick is to only purchase on days when it is actively traded. For example, note the volume in the chart in this link where a trade in VSS was described: http://www.bogleheads.org/forum/viewtop ... 901#742901 Do you see that the volume is high on that day (5/21) compared to the other days in the chart? You might also observe that the day before was a RBD.

The other thing to note is that this is SMALL cap FOREIGN with EMERGING markets. This is not an ETF of large-cap developed US/Europe/Japan stocks. As such, the spread will be bigger.
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leonidas
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Post by leonidas » Sun Aug 21, 2011 5:06 pm

I currently do not have an international small cap fund in my portfolio. My thrift plan at work has a large dev international and an emerging markets fund. I have been looking at int small cap and narrowed it down to schwab (sche) and vanguards vss. Is this considered a necessary asset class? Would these be ok in a taxable account?
Thanks!

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Post by livesoft » Sun Aug 21, 2011 5:10 pm

I consider it a necessary asset class. I own the bulk of my shares of VSS in taxable. But what do I know?
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leonidas
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Post by leonidas » Sun Aug 21, 2011 5:25 pm

Thanks livesoft!

If a 5% slice in my portfolio meaningful enough to make a difference? I usually break my assets classes in 10% slices at a minimum but my taxable accounts are just not that large.

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Post by livesoft » Sun Aug 21, 2011 5:29 pm

leonidas wrote:If a 5% slice in my portfolio meaningful enough to make a difference?
Who knows? VSS about 20% of my equities.
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walkinwood
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Post by walkinwood » Sun Aug 21, 2011 5:29 pm

Thanks all for your responses. I have no way of knowing if it is an essential asset class. I have had a small cap fund in my portfolio for years & I believe it has provided good diversification.

I thought this would be a good time to diversify into an international small cap fund because a rebalance into equities seems to be in my near future. I can fund the new asset class without selling other equity positions. I am retired, so no new influx of capital.

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mhc
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Post by mhc » Sun Aug 21, 2011 7:38 pm

livesoft wrote:VSS is the best choice. The link shows what else is out there with some explanation of each. Just because the link shows VSS last means little. Did you read why it was listed last? Do you agree or disagree with that reason?
Livesoft,

I did read it. I do not agree with it. I am with you on VSS. I would prefer to have the emerging market. I do not see a reason to leave out that part of the market.

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Post by livesoft » Sun Aug 21, 2011 7:46 pm

Note that the AltruistFA site of Eric Haas does advocate owning EmergingMarkets SmallCap (and Value), but does suggest using a separate fund for that particular asset class. So it would be better to write that you prefer to hold ForeignSmallCap developed and emerging in a single low-cost fund. Nothing wrong with that in my opinion.
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Pacal
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Post by Pacal » Sun Aug 21, 2011 8:30 pm

livesoft wrote:
leonidas wrote:If a 5% slice in my portfolio meaningful enough to make a difference?
Who knows? VSS about 20% of my equities.
I too have 20 % of my equities in VSS.

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Post by DoWahDaddy » Sun Aug 21, 2011 8:57 pm

Ive used t rowe price international discovery and am quite pleased. A bit expensive but there are no purchase or sale fees and the expenses have not prevented their outperformance. Trowe is a good family, and this is one of their better offerings. My opinion, albeit a rare one in this forum.
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Post by grabiner » Sun Aug 21, 2011 9:30 pm

mhc wrote:
Livesoft,

if I understand your post correctly, you are saying VSS is the best choice.

The URL you listed shows VSS as the last choice.
Altruist has separate categories for developed and emerging markets, and a single fund or ETF which covers both is not a good choice if you want only developed markets; this is why Altruist rates VSS poorly.

However, if you want both developed and emerging, then a single fund which covers both is better than separate funds, as it won't have any capital gains when a country is reclassified from emerging to developed.
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SVariance1
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Post by SVariance1 » Mon Aug 22, 2011 6:44 am

DoWahDaddy wrote:Ive used t rowe price international discovery and am quite pleased. A bit expensive but there are no purchase or sale fees and the expenses have not prevented their outperformance. Trowe is a good family, and this is one of their better offerings. My opinion, albeit a rare one in this forum.
You are not the only one to use an actively managed international small cap fund. I use Royce International Smaller Companies. Fees are much higher than T. Rowe's Fund. AUM is very small.
Mike

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