Why does anyone invest in international funds?

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Brianmcg321
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Why does anyone invest in international funds?

Post by Brianmcg321 » Tue Mar 24, 2020 5:24 pm

Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

jpmorganfunds
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Re: Why does anyone invest in international funds?

Post by jpmorganfunds » Tue Mar 24, 2020 5:26 pm

China funds have been beating US funds bloody red. :sharebeer

peskypesky
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Re: Why does anyone invest in international funds?

Post by peskypesky » Tue Mar 24, 2020 5:26 pm

I made the mistake of investing in international stock indexes because "experts" said to.

Now I know that I am smarter than those experts. Or maybe they were just corrupt.

livesoft
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Re: Why does anyone invest in international funds?

Post by livesoft » Tue Mar 24, 2020 5:27 pm

Are you trying to shift discussions back to normal? If so, then consider this a trite response that just increases my post count. Thank you!
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Brianmcg321
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Re: Why does anyone invest in international funds?

Post by Brianmcg321 » Tue Mar 24, 2020 5:31 pm

livesoft wrote:
Tue Mar 24, 2020 5:27 pm
Are you trying to shift discussions back to normal? If so, then consider this a trite response that just increases my post count. Thank you!
Yes. High five.
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

RomeoMustDie
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Re: Why does anyone invest in international funds?

Post by RomeoMustDie » Tue Mar 24, 2020 5:34 pm

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.






Your welcome everyone. Just doing my part. :sharebeer
In theory, to insure against interest rate or inflation risk with domestic stocks and bonds.

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Re: Why does anyone invest in international funds?

Post by sperry8 » Tue Mar 24, 2020 5:39 pm

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
One does not invest only to pick the best investment as it cannot be known beforehand what that investment is. One invests and diversifies so as to reduce risk and ensure market like returns. If you only pick one sector or one country, your chance of losing is much greater and you're taking higher risk to do so. It is as though you are making a bet. And this bet says you know more than the collective wisdom of the markets as a whole. It's your money so you can do what you want with it. But for me, I know I'm not smart enough to pick winners in advance of the game starting. I'll happily collect my market like returns with reduced risk.
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Re: Why does anyone invest in international funds?

Post by Phineas J. Whoopee » Tue Mar 24, 2020 5:44 pm

Conflating verb tenses can be hazardous to your wealth.
PJW

lostdog
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Re: Why does anyone invest in international funds?

Post by lostdog » Tue Mar 24, 2020 5:47 pm

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
Because you're not an investor, you're a performance chaser.
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anon_investor
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Re: Why does anyone invest in international funds?

Post by anon_investor » Tue Mar 24, 2020 5:51 pm

Better question why not S&P500 over Total Stock Market? :sharebeer

Trader Joe
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Re: Why does anyone invest in international funds?

Post by Trader Joe » Tue Mar 24, 2020 5:58 pm

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.









Your welcome everyone. Just doing my part. :sharebeer

This is a great question. I do not invest in international funds and I personally do not know of anyone that does.

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Re: Why does anyone invest in international funds?

Post by Starfox » Tue Mar 24, 2020 6:02 pm

anon_investor wrote:
Tue Mar 24, 2020 5:51 pm
Better question why not S&P500 over Total Stock Market? :sharebeer
I invest in SP500 instead of Total Stock Market. I choose not to own an International fund due to personal comfort reasons, but I would not mind receiving profits from operations overseas, SP500 provides better international exposure with the largest 500 US companies, than the smaller 3000 US companies can.

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Re: Why does anyone invest in international funds?

Post by surfstar » Tue Mar 24, 2020 6:15 pm

meh
...
Last edited by surfstar on Tue Mar 31, 2020 4:36 pm, edited 1 time in total.

The Broz
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Re: Why does anyone invest in international funds?

Post by The Broz » Tue Mar 24, 2020 6:21 pm

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
I see what you did there!

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Re: Why does anyone invest in international funds?

Post by JamesDean44 » Tue Mar 24, 2020 6:51 pm

:sharebeer

patrick
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Re: Why does anyone invest in international funds?

Post by patrick » Tue Mar 24, 2020 8:27 pm

International has CRUSHED domestic since March 19, 2020:

+5.33% VTIAX (Vanguard Total International Stock Index Fund Admiral)
+1.98% VTSAX (Vanguard Total Stock Market Index Fund Admiral)

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anon_investor
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Re: Why does anyone invest in international funds?

Post by anon_investor » Wed Mar 25, 2020 7:43 am

patrick wrote:
Tue Mar 24, 2020 8:27 pm
International has CRUSHED domestic since March 19, 2020:

+5.33% VTIAX (Vanguard Total International Stock Index Fund Admiral)
+1.98% VTSAX (Vanguard Total Stock Market Index Fund Admiral)
What about since Jan 1, 2020?
-28.33% VTIAX
-25.16% VTSAX

alex_686
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Re: Why does anyone invest in international funds?

Post by alex_686 » Wed Mar 25, 2020 7:48 am

So, since we are going back to normal....

For the past 20 years international stocks have tracked their US counterparts. In fact, the statistical power of "region" has been falling.

So, let me turn this on its head. Why are people making sector bets on large growth companies concentrated in the tech sector? That is why the "US" has outperformed. Instead of US, one would have been better off if you had just invested in those factors without regard to country.

petulant
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Re: Why does anyone invest in international funds?

Post by petulant » Wed Mar 25, 2020 7:49 am

anon_investor wrote:
Wed Mar 25, 2020 7:43 am
patrick wrote:
Tue Mar 24, 2020 8:27 pm
International has CRUSHED domestic since March 19, 2020:

+5.33% VTIAX (Vanguard Total International Stock Index Fund Admiral)
+1.98% VTSAX (Vanguard Total Stock Market Index Fund Admiral)
What about since Jan 1, 2020?
-28.33% VTIAX
-25.16% VTSAX
I wonder if this is another sector issue. I've seen compelling analyses before on this forum that the difference between US and other developed countries has been the higher proportion of technology stocks in the US. I suspect this could be similar--some of the big technology companies maybe declined a bit less since there will be more demand for their services while people stay at home, like Microsoft, Amazon, etc.

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Re: Why does anyone invest in international funds?

Post by petulant » Wed Mar 25, 2020 7:49 am

alex_686 wrote:
Wed Mar 25, 2020 7:48 am
So, since we are going back to normal....

For the past 20 years international stocks have tracked their US counterparts. In fact, the statistical power of "region" has been falling.

So, let me turn this on its head. Why are people making sector bets on large growth companies concentrated in the tech sector? That is why the "US" has outperformed. Instead of US, one would have been better off if you had just invested in those factors without regard to country.
Ahhhhh! We brought it up at almost the same time! :sharebeer

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Re: Why does anyone invest in international funds?

Post by MotoTrojan » Wed Mar 25, 2020 7:50 am

alex_686 wrote:
Wed Mar 25, 2020 7:48 am
So, since we are going back to normal....

For the past 20 years international stocks have tracked their US counterparts. In fact, the statistical power of "region" has been falling.

So, let me turn this on its head. Why are people making sector bets on large growth companies concentrated in the tech sector? That is why the "US" has outperformed. Instead of US, one would have been better off if you had just invested in those factors without regard to country.
Have US value funds not also crushed total international?

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anon_investor
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Re: Why does anyone invest in international funds?

Post by anon_investor » Wed Mar 25, 2020 7:51 am

petulant wrote:
Wed Mar 25, 2020 7:49 am
alex_686 wrote:
Wed Mar 25, 2020 7:48 am
So, since we are going back to normal....

For the past 20 years international stocks have tracked their US counterparts. In fact, the statistical power of "region" has been falling.

So, let me turn this on its head. Why are people making sector bets on large growth companies concentrated in the tech sector? That is why the "US" has outperformed. Instead of US, one would have been better off if you had just invested in those factors without regard to country.
Ahhhhh! We brought it up at almost the same time! :sharebeer
I don't know the answer off the top of my head, how has a US tech sector fund performed against an international tech sector fund during this drop?

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Re: Why does anyone invest in international funds?

Post by alex_686 » Wed Mar 25, 2020 8:01 am

MotoTrojan wrote:
Wed Mar 25, 2020 7:50 am
Have US value funds not also crushed total international?
I will punt here - I don't have the data at my fingertips.

I know that sector and size is playing a more important role here. These factors are very different between US and DM. Also, value is a relative thing. US value is basically growth in the international context. US sure loves its leverage.

That being said, I am thinking through what the current impact is having on companies. Intentional supply chains are being affected. Which sectors are being hit. Are large multinational companies or smaller regional ones better able to handle this disruption.

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Re: Why does anyone invest in international funds?

Post by bgf » Wed Mar 25, 2020 8:04 am

i've 'hired' vanguard and ishares to make that decision for me. i trust their decisionmaking over mine.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

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Re: Why does anyone invest in international funds?

Post by Peculiar_Investor » Wed Mar 25, 2020 8:07 am

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.
I'd change the question. Why do we keep getting new topics about international?

It is likely one of the most debated subjects on the Bogleheads. According to this search result there are 737 topics in this sub-forum that have the word 'international' in their subject. After all these discussions and pages upon pages of posts I don’t think I have seen anyone change their mind.

It boils down to:
  • For those that believe in International, it still makes sense.
  • For those that don’t believe in International, it doesn’t make sense.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams

MotoTrojan
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Re: Why does anyone invest in international funds?

Post by MotoTrojan » Wed Mar 25, 2020 8:11 am

alex_686 wrote:
Wed Mar 25, 2020 8:01 am
MotoTrojan wrote:
Wed Mar 25, 2020 7:50 am
Have US value funds not also crushed total international?
I will punt here - I don't have the data at my fingertips.

I know that sector and size is playing a more important role here. These factors are very different between US and DM. Also, value is a relative thing. US value is basically growth in the international context. US sure loves its leverage.

That being said, I am thinking through what the current impact is having on companies. Intentional supply chains are being affected. Which sectors are being hit. Are large multinational companies or smaller regional ones better able to handle this disruption.
Here is US Large Value, US Small Value, S&P500, and Total International for the last 20 years: https://www.portfoliovisualizer.com/bac ... ion3_3=100

US SCV dominates the field, with US Large Value actually beating the S&P500. Ex-US is the loser by a wide margin.

Just looking at the last decade (tech boom) all 3 US allocations are relatively tightly packed compared to ex-US losing by a wide margin: https://www.portfoliovisualizer.com/bac ... ion3_3=100

Going back to 1986 ex-US is still an outlier: https://www.portfoliovisualizer.com/bac ... ion3_3=100

Just for fun I'll toss this last one in where it is the past 20 years but I replace Total ex-US with small/small-value ex-US, which now only loses out to US small-value and not by much: https://www.portfoliovisualizer.com/bac ... ion3_3=100

FWIW I invest the majority of my ex-US in small fundamental (value tilting) funds.

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Re: Why does anyone invest in international funds?

Post by Chip » Wed Mar 25, 2020 8:30 am

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Your welcome everyone. Just doing my part. :sharebeer
Nice bit of chain-pulling there, OP. :beer

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Re: Why does anyone invest in international funds?

Post by TN_Boy » Wed Mar 25, 2020 8:58 am

livesoft wrote:
Tue Mar 24, 2020 5:27 pm
Are you trying to shift discussions back to normal? If so, then consider this a trite response that just increases my post count. Thank you!
You're working hard for that 70k count, aren't you :happy

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Re: Why does anyone invest in international funds?

Post by hagridshut » Wed Mar 25, 2020 8:59 am

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
:mrgreen:

I invest in international funds because there is no guarantee that the U.S. economy or U.S. companies will remain dominant in the future. If I am ultimately wrong, and U.S. stocks outperform International stocks in the long run, I am ok with that.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio

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Re: Why does anyone invest in international funds?

Post by Dandy » Wed Mar 25, 2020 9:04 am

I underweight international equities and avoid international bonds when possible. At my age 72 I think my mostly asset preservation allocation is nicely suited to the US equity and fixed income options. I think the the US has been an economic leader for decades and may continue that for awhile. But, if history tells us anything countries rise and fall over time. I think that if I were in the early accumulation stage I'd be more inclined to allocate a decent percentage to non US equity and fixed income.

Interesting and somewhat scary that the impact of this virus has been much harder on Europe and the US then other areas. Hopefully, that isn't a signal of any long term impact on western economies going forward.

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Re: Why does anyone invest in international funds?

Post by pokebowl » Wed Mar 25, 2020 9:06 am

MotoTrojan wrote:
Wed Mar 25, 2020 8:11 am

FWIW I invest the majority of my ex-US in small fundamental (value tilting) funds.
Out of curiosity what funds do you use? This is the one area that it has been hard to find specific mutual funds or ETFs that target this.
Nullius in verba.

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Re: Why does anyone invest in international funds?

Post by DaftInvestor » Wed Mar 25, 2020 9:09 am

Because in the next 10 years they will OUTPERFORM US Stock funds.

Your Welcome :)

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Spinola
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Re: Why does anyone invest in international funds?

Post by Spinola » Wed Mar 25, 2020 9:26 am

Because recency bias is a thing..
Because home bias is a thing.
Because nothing lasts forever.
Because today's winners are tomorrow's losers.
Because no one knows what will happen next.
Diversification. Don't bet on just one horse.
Because the United States economy may end up with a situation far worse than Italy's or China's due to wasting precious time for vanity and political reasons, the defunding of critical programs, the lack of testing, ventilators and personal protective equipment for healthcare workers, because of an inequitable hodge-podge profit-driven healthcare system, the lack of paid sick leave, and an abismal lack of leadership and national preparedness.

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Re: Why does anyone invest in international funds?

Post by MotoTrojan » Wed Mar 25, 2020 9:34 am

pokebowl wrote:
Wed Mar 25, 2020 9:06 am
MotoTrojan wrote:
Wed Mar 25, 2020 8:11 am

FWIW I invest the majority of my ex-US in small fundamental (value tilting) funds.
Out of curiosity what funds do you use? This is the one area that it has been hard to find specific mutual funds or ETFs that target this.
I am using FNDC (Schwab's Russell RAFI Developed Small fund) primarily, with some Total International in my 401k (right now nearly 90% FNDC though within my 30% ex-US allocation). I really fell in love with the Fundamental indexing approach after reading Rob's book, and it seemed like a good approach given my desire to use it for my entire allocation. On the US side (50% Tota/Value, 20% SCV) I am primarily using S&P600 value funds though to get a bigger tilt to small-caps; that is one of the downsides of the fundamental indexes is that they tend not to capture as much of the small-factor (larger median market-cap). If I were looking to augment an existing International allocation with SCV I would probably look at the new Avantis AVDV fund, looks promising, but I don't mind the slightly higher market cap as I hold very little large-cap ex-US.

Another con people have used against FNDC is it's significant current weight to Japan; I believe in the process though so no qualms for me.

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Re: Why does anyone invest in international funds?

Post by Toadandfriends » Wed Mar 25, 2020 9:35 am

What a great question!!! Thank you for asking. I invest in international funds bc when I read the US news I can't tell...is this from The Onion or is this for real???? 50% US 50% Intl

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Stef
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Re: Why does anyone invest in international funds?

Post by Stef » Wed Mar 25, 2020 10:01 am

I invest in international for the same reason I invest in TSM. Because I don't know any better and market cap weight is the only plausible solution.

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Re: Why does anyone invest in international funds?

Post by heyyou » Wed Mar 25, 2020 10:06 am

Japan was an East Asian powerhouse but then a crash occurred in their stock market. Somehow, the recovery stalled for most of a couple of decades. As a retiree, age 70, I don't have that much more longevity scheduled.
Thus, I have some non-domestic stock holdings just because .... they are non-domestic.

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Re: Why does anyone invest in international funds?

Post by Halicar » Wed Mar 25, 2020 10:51 am

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
Thanks OP.

Also, stock prices don't matter to me because I only invest in dividend stocks. :twisted:

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Re: Why does anyone invest in international funds?

Post by Blue456 » Wed Mar 25, 2020 10:52 am

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds?
Japan.

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Re: Why does anyone invest in international funds?

Post by 02nz » Wed Mar 25, 2020 10:59 am

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds? Their returns are terrible.










Your welcome everyone. Just doing my part. :sharebeer
Why does anyone invest in stock funds? Their returns have been terrible for the last month!

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UpsetRaptor
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Re: Why does anyone invest in international funds?

Post by UpsetRaptor » Wed Mar 25, 2020 11:13 am

The US has totally outperformed for, like, zillions of years. :D

Onlineid3089
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Re: Why does anyone invest in international funds?

Post by Onlineid3089 » Wed Mar 25, 2020 11:44 am

I do because I like to be just about as lazy as possible about our investments. As such our tax advantaged investments are all in 2050 target date funds. I do admit to a home bias and I over weight US stocks as the taxable account is all in VTSAX.

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Re: Why does anyone invest in international funds?

Post by FelixTheCat » Wed Mar 25, 2020 12:18 pm

I invest internationally for one reason: Diversification.
Felix is a wonderful, wonderful cat.

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Phineas J. Whoopee
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Re: Why does anyone invest in international funds?

Post by Phineas J. Whoopee » Wed Mar 25, 2020 5:56 pm

Spinola wrote:
Wed Mar 25, 2020 9:26 am
...
Diversification. Don't bet on just one horse.
...
Just like gold rushes and shovels, I'd prefer to own the racetrack.

PJW

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Re: Why does anyone invest in international funds?

Post by bck63 » Wed Mar 25, 2020 6:42 pm

Brianmcg321 wrote:
Tue Mar 24, 2020 5:24 pm
Why does anyone invest in international funds?
I don't. I invest in 500 of the biggest and best companies in the United States of America. Optimal? Who knows. Good enough for me? Yep.

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Kenkat
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Re: Why does anyone invest in international funds?

Post by Kenkat » Wed Mar 25, 2020 7:12 pm

anon_investor wrote:
Wed Mar 25, 2020 7:43 am
patrick wrote:
Tue Mar 24, 2020 8:27 pm
International has CRUSHED domestic since March 19, 2020:

+5.33% VTIAX (Vanguard Total International Stock Index Fund Admiral)
+1.98% VTSAX (Vanguard Total Stock Market Index Fund Admiral)
What about since Jan 1, 2020?
-28.33% VTIAX
-25.16% VTSAX
Stop quoting all that ancient history. January? That’s nearly three months ago. Didn’t you read the memo? Everything has changed now and we only look at fund performance over the following time periods:

Day to Date
1 day
3 days
5 days
10 days
15 days
Since inception*

* inception = the day the stock market started going down

Randolph Mortimer
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Re: Why does anyone invest in international funds?

Post by Randolph Mortimer » Wed Mar 25, 2020 7:18 pm

Why do I invest in international funds?

Because the returns are terrible.

I get extremely fearful when I feel like I am making too much money.

International funds help assuage that fear.

March2009
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Re: Why does anyone invest in international funds?

Post by March2009 » Wed Mar 25, 2020 9:01 pm

Maybe your question could be changed to: Why does anyone invest in non-technology funds?
In bear markets, stocks return to their rightful owners. - J.P. Morgan

JBTX
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Re: Why does anyone invest in international funds?

Post by JBTX » Wed Mar 25, 2020 9:06 pm

https://www.marketwatch.com/story/if-yo ... =home-page

GMO said emerging markets are cheap. I tend to agree with them.

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Re: Why does anyone invest in international funds?

Post by keelerjr12 » Wed Mar 25, 2020 9:19 pm

March2009 wrote:
Wed Mar 25, 2020 9:01 pm
Maybe your question could be changed to: Why does anyone invest in non-technology funds?
I get what you’re going for but this isn’t exactly the best example to use. Reason why, technology stocks are highly correlated to the SP500 (pretty dang close to 1). Yes, sector risk would apply in this case, but with such a high correlation the risk is going to be low.

The correlation between US and international funds is approx. .7. This allows for risk reduction benefits.

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