Total International Stock Index includes small caps or not?

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petrisunset
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Total International Stock Index includes small caps or not?

Post by petrisunset » Tue Mar 24, 2015 12:24 am

Can you please help me as I am confused. Does the Vanguard Total International Stock Index Fund include small caps or not?
According to Vanguards website in Fund Facts the Fund is a "Foreign Large Blend" fund. However, the index it is tracking (FTSE all World ex US) includes small caps.
I am looking for an international stock fund with the broadest possible exposure regarding company size and geographic distribution.
Thank all of you for your valuable input.

DSInvestor
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Re: Total International Stock Index includes small caps or n

Post by DSInvestor » Tue Mar 24, 2015 12:28 am

Vanguard Total International does include small cap. According to Morningstar:
29 26 23 Large cap
07 05 05 Mid cap
02 01 01 Small cap

Vanguard's FTSE All World ex-US VFWIX/VFWAX/VEU ETF does not include small caps:
33 29 26 large cap
05 04 04 mid cap
00 00 00 small cap
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Re: Total International Stock Index includes small caps or n

Post by nisiprius » Tue Mar 24, 2015 5:25 am

Vanguard Total International (VGTSX) does. It fits the description of "broadest possible exposure regarding company size and geographic distribution," as does iShares IXUS and perhaps Fidelity's FSGUX.

The existence of Vanguard's other international fund, VFWIX, also currently based on a different FTSE index, is always confusing. It was probably created by Vanguard as stopgap measure to allow them to offer an international ETF for three years during which the structure of VGTSX made it impossible to offer ETF shares. just call it an inexplicable historic accident and say you don't need to know anything about it other than to be aware it's not their mainstream total international fund.

As with Total Stock Market Index Fund (the big U.S. fund), the very nature of large-caps is that most of the value of the stock market is in large-caps and the amount of mid-caps and small-caps in VGTSX isn't very large and their presence doesn't matter much. You need to know what your investing strategy and beliefs are, and you'll find this one of many frequently argued topics here in the forum. Specifically, do you follow an investing theory that holds that "overweighting" small-cap stocks (or perhaps more specifically small-cap value stocks)--holding them in a higher proportion than the market holds--is beneficial? If you believe in having a small-cap tilt then no matter what fund you use you will want to have another fund holding that is specifically international small-caps. Vanguard does offer such a fund. (I personally do not tilt, but I'm a fairly sloppy investor who favors simplicity and does not bother trying to fine-tune).

I think it should be mentioned that strictly speaking, if you want the "broadest possible exposure regarding ... geographic distribution" there is also a Vanguard fund, the Vanguard Total World Stock Index Fund, VTWSX, that includes both U.S. and international stocks, in proportion to their global cap-weighting--approximately 50/50. I'm just saying--a fund that includes the U.S. along with the rest of the world does have a "broader" geographic distribution than one that doesn't! I don't think this fund make sense if you are also holding a U.S.-only fund--it's mostly appropriate if you have a personal investing strategy that says "let's mirror the whole world," which means less U.S. and more international than some investors like.
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Re: Total International Stock Index includes small caps or n

Post by livesoft » Tue Mar 24, 2015 5:59 am

Relative to large-caps, there just are not a lot of small-caps in the foreign markets which are less than 10% of foreign markets.

See thiis thread and chart:
viewtopic.php?f=1&t=153841
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Re: Total International Stock Index includes small caps or n

Post by abuss368 » Tue Mar 24, 2015 6:38 am

Total International Index includes small cap companies.
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Re: Total International Stock Index includes small caps or n

Post by jimishooch » Tue Mar 24, 2015 2:47 pm

international is frustrating,

VXUS is supposed to have 8% small caps but Morningstar X-ray puts it at 4%. so I use VSS to bump up my small caps to 8% or so and that dilutes emerging markets so I use IEMG (total emerging markets) to bump up my EM to 20% of my total international exposure.

and then most if not all EM funds have developed markets in them for further diluting. I use Morningstar x-ray to get to where I want to go because vanguard doesn't offer the stock fund box style (under portfolio watch) on the international side...but then I can go to vanguard's portfolio tester to see I have 20% EM...just because my wife's 401k offerings suck :).

good luck
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Re: Total International Stock Index includes small caps or n

Post by YDNAL » Wed Mar 25, 2015 2:50 pm

petrisunset wrote:Can you please help me as I am confused. Does the Vanguard Total International Stock Index Fund include small caps or not?
According to Vanguards website in Fund Facts the Fund is a "Foreign Large Blend" fund. However, the index it is tracking (FTSE all World ex US) includes small caps.
I am looking for an international stock fund with the broadest possible exposure regarding company size and geographic distribution.
Thank all of you for your valuable input.
Short answer: yes.

Long answer: it doesn't matter much. The investable international stock market, at market weights, is heavily weighted to Large Caps. Vanguard has 2 FTSE funds, one with, one without small caps. Despite it likely irrelevant going forward, this is recently history:

Code: Select all

VGTSX	T.Return		VFWIX	T.Return	
2014	  -4.24%		2014	  -4.21%	
2013	  15.04%		2013	  14.34%	
2012	  18.14%		2012	  18.35%	
2011	 -14.56%		2011	 -14.41%	
2010*	 11.12%		2010	  11.69%
*[edit]
In 2010, VGTSX changed from MSCI EAFE + Emerging to MSCI All Country World ex USA Investable Market Index.
in 2013, it changed index again from MSCI to FTSE Global all cap.

Do you see an Earth-shattering difference in the above table?
Last edited by YDNAL on Wed Mar 25, 2015 3:08 pm, edited 2 times in total.
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Re: Total International Stock Index includes small caps or n

Post by abuss368 » Wed Mar 25, 2015 2:58 pm

I still do not understand why Vanguard manages the two funds anymore and does not merge them.
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Re: Total International Stock Index includes small caps or n

Post by bertie wooster » Wed Mar 25, 2015 3:01 pm

I think they are good tax loss harvesting partners.

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Re: Total International Stock Index includes small caps or n

Post by grabiner » Wed Mar 25, 2015 8:31 pm

abuss368 wrote:I still do not understand why Vanguard manages the two funds anymore and does not merge them.
While the names are confusing, the pair makes sense. In US stocks, Vanguard has a Large-Cap Index, a Small-Cap Index, and a Total Stock Market Index which includes both. Similarly, in foreign stocks, Vanguard has the large-only FTSE All-World Ex-US, the small-only FTSE All-World Ex-US Small-Cap, and the Total International Index which includes both.

You may have a reason to hold more large-caps or more small-caps (either because you want to deviate from the market weight or because you have a small-cap or large-cap fund elsewhere), and thus having separate large-only and small-only funds is useful.
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Re: Total International Stock Index includes small caps or not?

Post by jrbdmb » Wed Oct 26, 2016 12:06 pm

Interestingly, the 401Ks of my previous employer and my current employer do not offer Vanguard Total International, but both offer the FTSE All-World Ex-US fund.

More interestingly, neither 401K offer the FTSE All-World Ex-US Small-Cap fund, so i am now compensating by putting the international component of my Roth IRA into VFSVX. Annoying that this fund has the highest costs (0.31%) of any fund in my portfolio, but I will admit that vanguard has spoiled me.

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Re: Total International Stock Index includes small caps or not?

Post by triceratop » Wed Oct 26, 2016 12:09 pm

jrbdmb wrote:Interestingly, the 401Ks of my previous employer and my current employer do not offer Vanguard Total International, but both offer the FTSE All-World Ex-US fund.

More interestingly, neither 401K offer the FTSE All-World Ex-US Small-Cap fund, so i am now compensating by putting the international component of my Roth IRA into VFSVX. Annoying that this fund has the highest costs (0.31%) of any fund in my portfolio, but I will admit that vanguard has spoiled me.
If your Roth IRA is a brokerage account you can buy the ETF fund class of VFSVX at an ER of 0.16%, of course.

[Also, this thread was long dead, but now arisen!]
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Re: Total International Stock Index includes small caps or n

Post by SeeMoe » Thu Oct 27, 2016 10:09 am

bertie wooster wrote:I think they are good tax loss harvesting partners.
Timely that you mention that(TLH) , as I did just that recently with the total international stock fund. Exchanged some total international bond share profits as well in the IRA account.

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