Pointless to own Emerging Markets fund if already own International?

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Jesteroftheswamp
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Pointless to own Emerging Markets fund if already own International?

Post by Jesteroftheswamp »

I am debating adding a Vanguard Emerging Markets fund because I already have the International fund. I would have about 4% of my portfolio in this. Should already owning an Intl. Fund be a factor in my decision to purchase an EM fund, or not really?
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Vulcan
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Re: Pointless to own Emerging Markets fund if already own International?

Post by Vulcan »

Do you know something the market does not to tilt away from VTWAX as your sole stock holding?
If you torture the data long enough, it will confess to anything. ~Ronald Coase
Ferdinand2014
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Re: Pointless to own Emerging Markets fund if already own International?

Post by Ferdinand2014 »

1.) Some 'international funds' have emerging markets and others do not. To answer your question requires which fund you currently own or are considering.
2.) It depends on wether you desire a market capitalization of emerging markets in your international portfolio or not.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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Quercus Palustris
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Re: Pointless to own Emerging Markets fund if already own International?

Post by Quercus Palustris »

Further muddying the water, different index creators treat different countries as "emerging" based on their own criteria.

- MSCI indices (IDEV & IEMG from iShares) treats South Korea as emerging
- S&P indices (SPDW & SPEM from State Street) treat South Korea as developed
- FTSE indices (VTMGX & VEMAX from Vanguard) treat South Korea as developed

Of course holding SK twice or not at all probably won't ruin your portfolio, but something to consider if your fund selection is limited and you end up mixing MSCI/FTSE/S&P/CRSP index funds.

One solution if you truly want to buy the haystack would be to find an ex-US fund, which includes developed/emerging in their respective market cap ratio (IXUS, VFWAX).
Last edited by Quercus Palustris on Mon Jun 17, 2019 9:19 pm, edited 1 time in total.
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JoMoney
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Re: Pointless to own Emerging Markets fund if already own International?

Post by JoMoney »

Jesteroftheswamp wrote: Mon Jun 17, 2019 8:52 pm I am debating adding a Vanguard Emerging Markets fund because I already have the International fund. I would have about 4% of my portfolio in this. Should already owning an Intl. Fund be a factor in my decision to purchase an EM fund, or not really?
I wouldn't call it "Pointless"
I'm sure there are reasons to do it. I don't have an international allocation, Mr. Bogle didn't think it was necessary for U.S. investors either, but he did suggest that those who do might limit their allocation to 20% --- even suggested 10% developed + 10% emerging... a full HALF of the international allocation to EM, I find that a curious allocation coming from him :confused (@ 2:37 in video
https://youtu.be/amVRTAwafOA?t=102 )
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
codedude
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Re: Pointless to own Emerging Markets fund if already own International?

Post by codedude »

No it is not pointless to hold EM if you are tilting to EM. If 401ks had a developed international markets fund, I would hold separate DM and EM funds, but the 401ks we have access to have only international funds. So I have Internationsl funds and EM funds.
fennewaldaj
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Re: Pointless to own Emerging Markets fund if already own International?

Post by fennewaldaj »

If you want to overweight EM it is fine to do it by holding a total international fund and a separate EM fund. It is also fine to hold it as a developed fund and an emerging fund. Which is better depends on fund availability in retirement accounts as well as how you want your overweight to look. If you want a fixed % in EM then fully separate funds makes the most sense. If you want the market value + an over weight a total fund and an additional EM fund makes sense.
UpperNwGuy
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Re: Pointless to own Emerging Markets fund if already own International?

Post by UpperNwGuy »

Why do you want to tilt to emerging markets?
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Jesteroftheswamp
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Re: Pointless to own Emerging Markets fund if already own International?

Post by Jesteroftheswamp »

UpperNwGuy wrote: Mon Jun 17, 2019 9:48 pm Why do you want to tilt to emerging markets?
More risk more reward 🤷‍♂️
workerbeeengineer
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Re: Pointless to own Emerging Markets fund if already own International?

Post by workerbeeengineer »

I reviewed Vanguard Total International and Ex-US Small Cap funds a few months ago. Both had 20% in Emerging Markets. I was holding equal percentages in those two funds and Vanguard EM fund. So in my view, I was tilting more towards EM more than I wanted. If my math is correct, instead of one third EM, I was 7/15 (almost half) EM. I had to make adjustments.
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