If International, what specifically?

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Broken Man 1999
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If International, what specifically?

Post by Broken Man 1999 »

OK, we all know the passions of those who do, and those who do not hold international investments.

It is a discussion that will never end, so long as both sides have at least one investor willing to do battle.

What I do not see much of are posts discussing WHAT international investments, other than the Total International Stock Index product.

Now, for the record I pinch my nostrils when it is time to add $$$ to Total Intl. Stock Market, but I do so. My reward of adding new money has been losses for the most part.

So, I would like to know what other international investments posters have selected for their portfolio.

It is my hope that Total Intl. Stock Index will not be discussed, as I believe that particular investment has been discussed more than enough.

Another hope is the discussion will not be derailed and turn into another International vs. No international food fight. :D

So, what international investments do Bogleheads hold, exclusive of Total Intl. Stock Market Index?

Broken Man 1999
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Robot Monster
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Re: If International, what specifically?

Post by Robot Monster »

If one is leery of adding further China exposure, Developed International (VEA ETF) is an option. (I'm going this route.)

Vanguard Wellington Fund has 10.2% foreign exposure.
burritoLover
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Re: If International, what specifically?

Post by burritoLover »

I've been wanting to add international small-cap value but I can't find any decent fund to do this.
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NYCPete
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Re: If International, what specifically?

Post by NYCPete »

Earlier this year, I tax loss harvested out of Total International to Vanguard FTSE Ex US. Then a few weeks later I TLH again into Vanguard Developed Markets and have stayed there ever since. The only major difference between Developed Market and the previous two is that it doesn't have the 25% emerging markets in it. Frankly, this would have been a major boon the last decade, as EM pulled down a fund like Total International. Who knows whether that will be the case moving forward. Yet, I find myself liking the simplicity and reduced volatility of an int'l fund that doesn't include emerging markets. I also hold the Vanguard FTSE ex US small cap fund, in a tax sheltered account. No international bonds for me.

If I were to expand beyond these international options, the first one I might explore would be an international REIT index fund like Vanguard's Global Ex US Real Estate Index fund.

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha
Walkure
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Re: If International, what specifically?

Post by Walkure »

NYCPete wrote: Fri Aug 21, 2020 10:43 am Earlier this year, I tax loss harvested out of Total International to Vanguard FTSE Ex US. Then a few weeks later I TLH again into Vanguard Developed Markets and have stayed there ever since. The only major difference between Developed Market and the previous two is that it doesn't have the 25% emerging markets in it. Frankly, this would have been a major boon the last decade, as EM pulled down a fund like Total International. Who knows whether that will be the case moving forward. Yet, I find myself liking the simplicity and reduced volatility of an int'l fund that doesn't include emerging markets. I also hold the Vanguard FTSE ex US small cap fund, in a tax sheltered account. No international bonds for me.

If I were to expand beyond these international options, the first one I might explore would be an international REIT index fund like Vanguard's Global Ex US Real Estate Index fund.

Best,
Peter
It's funny, I've been going in the opposite direction. Around the nadir in March I held my nose and paid the .25% redemption fee to dump VGRLX and roll it all into my core FTSE Ex-US. Now, I'm adding emerging markets in a separate fund. The trouble with VGRLX (Aside from the fees - use the ETF instead) is that it doesn't have a good fit tax-wise. It throws off too much in dividends, and the international "REITs" don't all get treated the same as domestic REITs under the new US tax structure.
stan1
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Re: If International, what specifically?

Post by stan1 »

burritoLover wrote: Fri Aug 21, 2020 10:25 am I've been wanting to add international small-cap value but I can't find any decent fund to do this.
Use AVDV
Massdriver
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Re: If International, what specifically?

Post by Massdriver »

As a result of what used to be commission free ETFs at Ameritrade, in one of my portfolios I have the following:

VEA- Developed markets international (Largest int holding)
VWO- Emerging markets international

For small caps I have the following:
AVDV- small cap value developed international
VSS- small cap international (dev+EM)

In other accounts I just have VXUS+AVDV for my small cap value tilt.
RocketShipTech
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Re: If International, what specifically?

Post by RocketShipTech »

I’ve been putting 125% of my paychecks into IMTM
Blue456
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Re: If International, what specifically?

Post by Blue456 »

Broken Man 1999 wrote: Fri Aug 21, 2020 10:05 am What I do not see much of are posts discussing WHAT international investments, other than the Total International Stock Index product.
You can use Vanguard Total Word Stock (VT) instead of total international. This fund will automatically adjust US to international exposure based on market weight. To adjust tilt to your preference you can throw in VOO to get extra 10% or 20% or 30% over.
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SD2SR
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Re: If International, what specifically?

Post by SD2SR »

I'm sure I'll get lanced by the TISM folks as previously suggested, but I definitely prefer developed markets for international. I've never had warm fuzzies about emerging markets in general,particularly on China in the mid-term...just not within my risk appetite.

We're Fidelity customers, so Fidelity International Index Fund (FSPSX) across the board, though VEA is definitely more diverse. Int'l only makes up 20% of our equity holdings, everything else is TSM.
brad.clarkston
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Re: If International, what specifically?

Post by brad.clarkston »

burritoLover wrote: Fri Aug 21, 2020 10:25 am I've been wanting to add international small-cap value but I can't find any decent fund to do this.
Good luck. I've been looking for years and there all medium/large-cap masquerading as small-cap except for the DFA funds.

DFA International Small Cap Value I DISVX would be the one I'd take if I could get it without giving them my entire port.
Massdriver
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Re: If International, what specifically?

Post by Massdriver »

brad.clarkston wrote: Fri Aug 21, 2020 11:21 am
burritoLover wrote: Fri Aug 21, 2020 10:25 am I've been wanting to add international small-cap value but I can't find any decent fund to do this.
Good luck. I've been looking for years and there all medium/large-cap masquerading as small-cap except for the DFA funds.

DFA International Small Cap Value I DISVX would be the one I'd take if I could get it without giving them my entire port.
As mentioned earlier in this thread, look at AVDV. It is run by some former DFA people and the ETF is available to retail investors. The fund was started in 2019. Check it out:
https://www.avantisinvestors.com/conten ... e-etf.html
NYCPete
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Re: If International, what specifically?

Post by NYCPete »

Walkure wrote: Fri Aug 21, 2020 10:55 am
NYCPete wrote: Fri Aug 21, 2020 10:43 am Earlier this year, I tax loss harvested out of Total International to Vanguard FTSE Ex US. Then a few weeks later I TLH again into Vanguard Developed Markets and have stayed there ever since. The only major difference between Developed Market and the previous two is that it doesn't have the 25% emerging markets in it. Frankly, this would have been a major boon the last decade, as EM pulled down a fund like Total International. Who knows whether that will be the case moving forward. Yet, I find myself liking the simplicity and reduced volatility of an int'l fund that doesn't include emerging markets. I also hold the Vanguard FTSE ex US small cap fund, in a tax sheltered account. No international bonds for me.

If I were to expand beyond these international options, the first one I might explore would be an international REIT index fund like Vanguard's Global Ex US Real Estate Index fund.

Best,
Peter
It's funny, I've been going in the opposite direction. Around the nadir in March I held my nose and paid the .25% redemption fee to dump VGRLX and roll it all into my core FTSE Ex-US. Now, I'm adding emerging markets in a separate fund. The trouble with VGRLX (Aside from the fees - use the ETF instead) is that it doesn't have a good fit tax-wise. It throws off too much in dividends, and the international "REITs" don't all get treated the same as domestic REITs under the new US tax structure.
Yeah, the purchase and redemption fee on the mutual fund version is what has put me off in the past (I prefer the MF class vs ETF to keep things simple and predictable). I'm a little surprised it's still sticking around. Both VGRLX and the Vanguard FTSE ex US Small cap started out with a purchase fee. The VG Int'l Small cap got rid of theirs a few years ago, and both funds have over $5B in assets. The only reason I can think is that for the int'l small cap fund, most of those assets are in the ETF, and for the Int'l Real estate fund most of them are in the mutual fund version.

Anecdotally, I've been pretty underwhelmed at the relative size of the foreign tax credit (FTC) for holding Total international in taxable, so I have a hard time seeing what the big deal would be for holding Int'l REIT in tax sheltered and foregoing it. I guess FTC might be different for Int'l REIT...it'd be interesting to run hypothetical numbers on what the FTC would be for Int'l REIT. But it's all moot for me until that purchase fee goes away! :D

Best,
Peter
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Re: If International, what specifically?

Post by ChinchillaWhiplash »

Hold close to equal parts SFILX and VYMI. 40% of total equity holdings. Basically is my version of an all cap international value fund.
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JamalJones
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Re: If International, what specifically?

Post by JamalJones »

.
Jan 1995 - Jul 2020
...................................................CAGR..... Stdev
.
US Stock Market...............................9.96%_...15.39%  
.
European Stocks...............................6.64%_...17.61%
.
International ex-US Small Cap...............6.54%_...17.20%
.
Emerging Markets..............................5.99%_...22.78%
.
International ex-US Value....................4.68%...17.17%
.
Intl Developed ex-US Market................4.55%_...16.37%
.
Global ex-US Stock Market ..................4.52%_...16.89%
.
Pacific Stocks...................................2.23%_... 17.11%

(https://www.portfoliovisualizer.com/)

I have international small caps and emerging markets. I'll likely mix in some developed as soon as the TSP converts to a decent international fund. Hopefully they'll get that done some time next year. Not holding my breath though.

As you can see above, returns for over 25 years of various international markets (with US Market for reference).
TSP + Vanguard Roth IRA + Vanguard Taxable: 80% equities / 20% bonds | "I don't shine shoes, I don’t tape ankles, I don't cut checks - straight cash homie!!" --R. Moss
asif408
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Re: If International, what specifically?

Post by asif408 »

My biggest international holdings are PXH (emerging markets value) and AVDV (international small cap value). I've also held plain old VTIAX (total international) and VEMAX (emerging markets index), but shifted to a more value heavy portfolio in recent years. I'm not sure you'd like these, though, they've done even worse recently than total international. I like their long term prospects, though.

Some people have been posting here about Vanguard International Growth here in recent months, which I looked up and now give it the moniker QQQ lite. Its an "international" fund that holds Tesla and Amazon and overweights the same sectors as QQQ. Not surprisingly, it's done better than Total International. What might surprise some is that its performance has been in line with QQQ over the last year and handily beaten both US Total Stock Market and Total International Stock Market. To me that's a warning sign, along with its composition, that it will likely perform more like QQQ in the near future, for better or worse. I wouldn't touch that fund with a 10 foot pole, but performance chasers seem to like it and think they are getting some international diversification without sacrificing recent past performance.
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Re: If International, what specifically?

Post by WildBill »

Howdy

I use VSS and VWILX, in addition to a Zero international Index fund from Fidelity.

VWILX is the Vanguard managed international fund. It has an allocation to about 10% US growth stocks at the moment. It is my side bet on world growth, with a fairly concentrated portfolio. It is 50% of my international allocation.

VSS is international small cap. It is my side bet on intl small cap. It is about 15% of my international allocation.

Edited - Just noted the above poster is leery of VWILX. I would also bee somewhat leery at current valuations, but it has been a core holding for me for many years and I am sticking with it. It sure has been a rocket ship the last couple of years.

Good luck to all

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid
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Re: If International, what specifically?

Post by geerhardusvos »

Robot Monster wrote: Fri Aug 21, 2020 10:23 am If one is leery of adding further China exposure, Developed International (VEA ETF) is an option. (I'm going this route.)

Vanguard Wellington Fund has 10.2% foreign exposure.
+1. VEA is my international exposure
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Topic Author
Broken Man 1999
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Re: If International, what specifically?

Post by Broken Man 1999 »

To those who have shared their particular international investments, Thank You!

I am taking a deep dive in international, as frankly other than simply buying TISM, I have done zero examination of the international sector.

Broken Man 1999
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Re: If International, what specifically?

Post by 000 »

VEA for me.
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Re: If International, what specifically?

Post by mindboggling »

My IRAs are in Vanguard LifeStrategy funds, which use total international for the international holdings. In taxable I recently started using VEA (developed market index).
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Re: If International, what specifically?

Post by pascalwager »

I've made recent changes to international over the last few months. The changes were mainly to increase diversification. I have two stock portfolios.

Portfolio 1: I've gone from 50% TISM to 38/12 TISM/EM. I would have preferred 33/17, but my accounts wouldn't allow this.

Portfolio 2: I've gone from 32/13/5 ILV/ISC/EM to 12/13/25 ISC/ISV/EM. I'm not allowed to buy new DFA ISC shares, so AVDV (ISV) was added for rebalancing.
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Re: If International, what specifically?

Post by Robert T »

.
In April 2001 David Booth proposed the following International allocation http://www.prudentllc.com/sevg/PDFs/Ind ... xFunds.pdf

67:33 Non-US Developed:EM with a small cap and value tilt

33% = DFA International Value (DFIVX)
17% = DFA International Small Company (DFISX)
17% = DFA International Small Cap Value (DISVX)
10% = DFA Emerging Markets (DFEMX)
10% = DFA Emerging Markets Value (DFEVX)
13% = DFA Emerging Markets Small Cap (DEMSX)

Here is the performance since then compared to = 67:33 Vanguard Non-US Developed (VGTMX):Vanguard Emerging Markets (VEIEX), and Vanguard Total International Stock (VGTSX). https://www.portfoliovisualizer.com/bac ... ion9_3=100

Obviously no guarantees
.
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Re: If International, what specifically?

Post by MotoTrojan »

Robert T wrote: Sat Aug 22, 2020 3:58 pm .
In April 2001 David Booth proposed the following International allocation http://www.prudentllc.com/sevg/PDFs/Ind ... xFunds.pdf

67:33 Non-US Developed:EM with a small cap and value tilt

33% = DFA International Value (DFIVX)
17% = DFA International Small Company (DFISX)
17% = DFA International Small Cap Value (DISVX)
10% = DFA Emerging Markets (DFEMX)
10% = DFA Emerging Markets Value (DFEVX)
13% = DFA Emerging Markets Small Cap (DEMSX)

Here is the performance since then compared to = 67:33 Vanguard Non-US Developed (VGTMX):Vanguard Emerging Markets (VEIEX), and Vanguard Total International Stock (VGTSX). https://www.portfoliovisualizer.com/bac ... ion9_3=100

Obviously no guarantees
.
Seems over complicated.

OP, my ex-US is solely in FNDC (RAFI small-cap fundamental) and IVAL (deep-value).
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Robert T
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Re: If International, what specifically?

Post by Robert T »

MotoTrojan wrote: Sat Aug 22, 2020 4:00 pm Seems over complicated.
Yes - the following allocation would have done just as well - https://www.portfoliovisualizer.com/bac ... bol9=VGTSX

34% = DFA International Value (DFIVX)
33% = DFA International Small Cap Value (DISVX)
33% = DFA Emerging Markets Value (DFEVX)

Personally am 44:30:26 ILV/ISV/EMV using RAFI funds.
.
LarryCarell
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Re: If International, what specifically?

Post by LarryCarell »

I invest in VXUS
MotoTrojan
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Re: If International, what specifically?

Post by MotoTrojan »

Robert T wrote: Sat Aug 22, 2020 4:09 pm
MotoTrojan wrote: Sat Aug 22, 2020 4:00 pm Seems over complicated.
Yes - the following allocation would have done just as well - https://www.portfoliovisualizer.com/bac ... bol9=VGTSX

34% = DFA International Value (DFIVX)
33% = DFA International Small Cap Value (DISVX)
33% = DFA Emerging Markets Value (DFEVX)

Personally am 44:30:26 ILV/ISV/EMV using RAFI funds.
.
Much more reasonable. Any RAFI products on your domestic side?
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Re: If International, what specifically?

Post by whereskyle »

Broken Man 1999 wrote: Fri Aug 21, 2020 10:05 am OK, we all know the passions of those who do, and those who do not hold international investments.

It is a discussion that will never end, so long as both sides have at least one investor willing to do battle.

What I do not see much of are posts discussing WHAT international investments, other than the Total International Stock Index product.

Now, for the record I pinch my nostrils when it is time to add $$$ to Total Intl. Stock Market, but I do so. My reward of adding new money has been losses for the most part.

So, I would like to know what other international investments posters have selected for their portfolio.

It is my hope that Total Intl. Stock Index will not be discussed, as I believe that particular investment has been discussed more than enough.

Another hope is the discussion will not be derailed and turn into another International vs. No international food fight. :D

So, what international investments do Bogleheads hold, exclusive of Total Intl. Stock Market Index?

Broken Man 1999
Because of the nostril holding, I am 50% VT and 50% VTI.
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Re: If International, what specifically?

Post by visualguy »

Robert T wrote: Sat Aug 22, 2020 3:58 pm .
In April 2001 David Booth proposed the following International allocation http://www.prudentllc.com/sevg/PDFs/Ind ... xFunds.pdf

67:33 Non-US Developed:EM with a small cap and value tilt

33% = DFA International Value (DFIVX)
17% = DFA International Small Company (DFISX)
17% = DFA International Small Cap Value (DISVX)
10% = DFA Emerging Markets (DFEMX)
10% = DFA Emerging Markets Value (DFEVX)
13% = DFA Emerging Markets Small Cap (DEMSX)

Here is the performance since then compared to = 67:33 Vanguard Non-US Developed (VGTMX):Vanguard Emerging Markets (VEIEX), and Vanguard Total International Stock (VGTSX). https://www.portfoliovisualizer.com/bac ... ion9_3=100

Obviously no guarantees
.
The question is how specific the strength of this type of portfolio was to the circumstances of the specific decade of 2000-2010. Things flipped significantly after that, so, yeah, no guarantees.

Not sure what a long-term good strategy is with foreign stock markets. As OP mentioned, indexing the whole thing has done too poorly in the long run, which is unfortunate because that would be the easy and straightforward approach if it actually worked, but it didn't, and that matters.

Another approach would be to focus on a few countries, but it gets complicated, and ultimately not sure this would make much difference in the overall portfolio unless you over-weigh those countries significantly. For example, Chinese stocks - there's potential since it's such a major rising economy, but the risks are very large. Maybe the risks are acceptable at China's weight in the world index (4.8%), but would you feel comfortable going much beyond that? If not, is it really worth the trouble in terms of making a difference to the overall portfolio when compared to buying US instead? Other countries you might pick (other than Japan) are even smaller, so picking a few select countries at market weight hasn't appealed to me much. Bottom line - I never really figured out a good strategy, so I stayed away, and that has worked very well thanks to US performance, but I do keep an open mind, and hope that something compelling will come up in one of these threads :wink:
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Re: If International, what specifically?

Post by vineviz »

Broken Man 1999 wrote: Fri Aug 21, 2020 10:05 am

So, what international investments do Bogleheads hold, exclusive of Total Intl. Stock Market Index?
My portfolio is roughly 18% US bonds, 41% US stocks and 41% ex-US stocks.

The ex-US piece currently is roughly:

40% Xtrackers MSCI EAFE High Div Yld Eq ETF (HDEF)
40% SPDR Portfolio Emerging Markets ETF (SPEM)
20% iShares JP Morgan EM Local Ccy Bd ETF (LEMB)

I treat LEMB as part of my equity allocation because of the high credit and currency exposures.
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Re: If International, what specifically?

Post by theorist »

My Vanguard account has about 33% of stocks in international funds. Other than total international index (the largest holding), I have bits of

VEMAX — emerging markets

VTRIX — international value

VWICX — the Wellington managed active core international fund (new and not much of a track record)

PRGSX — T Rowe Price’s global stock fund, which is very growth oriented and 50/50 domestic/international
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Re: If International, what specifically?

Post by Valuethinker »

vineviz wrote: Sun Aug 23, 2020 6:44 am
Broken Man 1999 wrote: Fri Aug 21, 2020 10:05 am

So, what international investments do Bogleheads hold, exclusive of Total Intl. Stock Market Index?
My portfolio is roughly 18% US bonds, 41% US stocks and 41% ex-US stocks.

The ex-US piece currently is roughly:

40% Xtrackers MSCI EAFE High Div Yld Eq ETF (HDEF)
40% SPDR Portfolio Emerging Markets ETF (SPEM)
20% iShares JP Morgan EM Local Ccy Bd ETF (LEMB)

I treat LEMB as part of my equity allocation because of the high credit and currency exposures.
A couple of questions:

- is the Xtrackers fund a proxy for value (high dividend yield)? I believe that the empirical data shows yield is a poor proxy for value (and that high yielding stocks tend to underperform) BUT when I invested in EM, I found only the EM Yield fund (iShares in Europe) had a significant tilt away from the usual suspects (Tencent & Alibaba, and 40% in China generally).

- is there an illiquidity/ concentration risk in the JPM local bond fund? Or does it use synthetic replication to overcome that? I presume it does not hedge currency risk back into USD? (my intuition is that hedging many EM currencies would be quite expensive).
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Re: If International, what specifically?

Post by Robert T »

.
I am becoming increasingly appreciative/aware of potential impacts of state-owned enterprises (SOEs) on EM and Non-US Developed Market stock returns.

The theory is that state owned enterprises (SOEs) distort market incentives (firm efficiency, allocation of capital, and labor productivity) resulting in lower returns on capital invested in these firms than in private firms.

How extensive are SOEs and what impact have they had on the valuation, composition, and performance of Emerging Market Stock Indexes?

Wisdomtree has an Emerging Markets ex-State Owned Enterprise Fund (XSOE) which excluded SOEs (defined as firms that have more than 20% of their shares owned by government entities).

What effects does this have (compared to the iShares MSCI Emerging Markets Index given that the MSCI Emerging Markets stock universe is the starting point for the Wisdomtree fund)?

1. The number of companies is reduced by more than half. More than half the companies in MSCI Emerging Markets Index seem to be SOEs (i.e. have more than 20% of shares owned by government entities). Removing SOEs reduces number of companies in the Index from 1202 to 506.
  • Number of companies in fund:
    1202 = iShares MSCI Emerging Market Index (EEM)
    506 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

2. Valuation goes up. This raises the question then about whether EM stocks are cheap or not. i.e. Are the relatively lower price multiples of EM market indexes just a reflection of ‘political risk’ in SOEs rather than a reflection of cheaper private companies than elsewhere in the world. Historically, has ‘political risk’ been rewarded? And is an emerging market holding just a ‘bet’ on the future pace of SOE reforms in these countries? Will get back to this at end.
  • Price-to-earnings/Price-to-book /Price-to-sales/Price-to-cash flow
    15.7/1.4/1.1/5.6 = iShares MSCI Emerging Market Index (EEM)
    19.2/1.9/1.4/7.9 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

3. Average company size goes up – although not dramatically.
  • Average Market Cap
    45.0bn = iShares MSCI Emerging Market Index (EEM)
    48.3bn = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

4. Recent performance has been better ex-SOEs.

5. Most (the biggest) SOEs are in the financial sector and energy, and the least in communication services, information technology, and consumer discretionary.
  • Financials / Energy portfolio share (%)
    18.2/5.7 = iShares MSCI Emerging Market Index (EEM)
    12.6/4.1 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)
    23.9/19.3 = Schwab Fundamental Emerging Markets (FNDE)
The Wisdomtree article indicates a larger underweight in energy and financials, and a larger overweight in communication services, information technology, and consumer discretionary (table on page 3 of following link). https://www.wisdomtree.com/-/media/us-m ... (xsoe).pdf


Thoughts: An extension of the above is that if SOEs drive lower valuations in emerging markets, then EM value indices will implicitly overweight SOEs. And as SOEs are distortive of market incentives then EM value indices should have lower returns than the overall EM market. The problem with this theory/causality is that EM value has had higher returns than the overall EM market over the long-term (see comparison of FTSE RAFI EM with FTSE EM below, and live returns of DFA EM Value). The relatively poor returns of value in 2020 are not a reflection of SOEs per say, but relatively poor performance of sectors such as energy with COVID lockdowns (earlier this year energy prices fell below the cost of production), and outperformance of communication services/technology with surge in online purchases during COVID. It may be true that EM may also be experiencing the recent tech boom (e.g. Alibaba, Tencent) but since inception of the Wisdomtree XSOE fund to the end 2019, the returns of the Schwab Fundamental EM (EM Value) were slightly higher 7.6% vs. 7.0%
  • Annualized return: 1/1994 – 8/2014
    13.1% = FTSE RAFI Emerging Market Index
    6.4% = FTSE Emerging Market Index
    Why end in 8/2014 - that is when I received these data from Research Affiliates (after requesting it).

    Annualized return: 4/1998 – 6/2020
    8.6% = DFA EM Value
    7.3% = Vanguard EM
    https://www.portfoliovisualizer.com/bac ... ion2_2=100

In short: Widsomtree Emerging Market ex-SOEs [XSOE] is another interesting fund to consider. I currently plan to stick with RAFI EM value but will be open to future research on this topic. Would be interested to see what an ex-SOE EM value fund would look like.

Robert
.
Last edited by Robert T on Sun Aug 23, 2020 7:55 am, edited 1 time in total.
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Re: If International, what specifically?

Post by Elysium »

asif408 wrote: Fri Aug 21, 2020 1:05 pm Some people have been posting here about Vanguard International Growth here in recent months, which I looked up and now give it the moniker QQQ lite. Its an "international" fund that holds Tesla and Amazon and overweights the same sectors as QQQ. Not surprisingly, it's done better than Total International. What might surprise some is that its performance has been in line with QQQ over the last year and handily beaten both US Total Stock Market and Total International Stock Market. To me that's a warning sign, along with its composition, that it will likely perform more like QQQ in the near future, for better or worse. I wouldn't touch that fund with a 10 foot pole, but performance chasers seem to like it and think they are getting some international diversification without sacrificing recent past performance.
When I read this comment, I was curious to find out more and looked up both funds on M*. Here is what I found:

VWILX - Vanguard Intl Growth
83% Foreign 12% US
Top holdings - Tencent, Alibaba, Asml holdings, and many other names unfamiliar to U.S investors. Only two stocks TSLA and AMZN in top 25 stocks in common with QQQ, they amount to 7.5% of total.
Sector wise - Consumer cyclical 31% and Tech is only 13% (Compare to QQQ 18% and 44%)
Based on the above it appears the performance is attributed to Foreign stocks with some help from perhaps TSLA and AMZN.

QQQ - Invesco QQQ Trust
97% U.S Equity
Top holdings - Apple, AMZN, MSFT, FB, Albhabet - 50% of fund assets are concentrated in this. Rest of top 25 are all familiar names to U.S investors.
Performance is all driven by top 5 tech stocks.

The only thing common with both are growth style. Worldwide growth funds are in a bull market and value funds are in bear market. The one thing this may prove again is that there is no need perhaps for international diversification since Growth and Value seems to move in lockstep for US/Intl.
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Re: If International, what specifically?

Post by vineviz »

Valuethinker wrote: Sun Aug 23, 2020 7:23 am
- is the Xtrackers fund a proxy for value (high dividend yield)?
Yes. I’m not thrilled with the number of low-cost value-tilted ex-US funds, and HDEF strikes a compromise for me. Decent value exposure without as much negative momentum exposure as other methodologies.

is there an illiquidity/ concentration risk in the JPM local bond fund? Or does it use synthetic replication to overcome that? I presume it does not hedge currency risk back into USD? (my intuition is that hedging many EM currencies would be quite expensive).
I’m using LEMB primarily to reduce the concentration of SPEM, since it’s 70% in its top three countries, only one of which is a top ten country in LEMB. There is no currency hedging, which helps reduce currency concentration.
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Re: If International, what specifically?

Post by klaus14 »

vineviz wrote: Sun Aug 23, 2020 6:44 am
Broken Man 1999 wrote: Fri Aug 21, 2020 10:05 am

So, what international investments do Bogleheads hold, exclusive of Total Intl. Stock Market Index?
My portfolio is roughly 18% US bonds, 41% US stocks and 41% ex-US stocks.

The ex-US piece currently is roughly:

40% Xtrackers MSCI EAFE High Div Yld Eq ETF (HDEF)
40% SPDR Portfolio Emerging Markets ETF (SPEM)
20% iShares JP Morgan EM Local Ccy Bd ETF (LEMB)

I treat LEMB as part of my equity allocation because of the high credit and currency exposures.
how did you come up with 2:1 ratio for EM stock/local bond ?

why no EM usd bond? Historicaly it performed better i think.

i do 2:1:1 em stock / local bond / usd bond.
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Re: If International, what specifically?

Post by vineviz »

klaus14 wrote: Sun Aug 23, 2020 8:52 am
how did you come up with 2:1 ratio for EM stock/local bond ?

why no EM usd bond? Historicaly it performed better i think.
No magic on the 2:1 ratio. I think my target is more like 1:1, but I’ve been slow to transition.

USD bonds are more highly correlated with my US holdings, naturally, so not quite as useful for diversification. USD foreign bonds tend to outperform local currency bonds when the dollar is stronger, which is when my US-domiciled assets are also generally doing well.
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Re: If International, what specifically?

Post by garlandwhizzer »

Robert T wrote:

In short: Widsomtree Emerging Market ex-SOEs [XSOE] is another interesting fund to consider. I currently plan to stick with RAFI EM value but will be open to future research on this topic. Would be interested to see what an ex-SOE EM value fund would look like.

Robert
I used to hold FNDE for LC EM but got tired of its volatility without commensurate outperformance in recent years and switched to XSOE a year or so ago. Robert T's concerns about the relatively lofty valuations of XSOE relative to ultra-cheap FNDE are valid. On the other hand, FNDE is loaded with government controlled companies in low/no growth economic sectors. Government controlled companies must serve two masters, the government with a political agenda and shareholders with an economic agenda. Usually the government wins when there is conflict between these two goals. I believe that XSOE by avoiding GOEs has more of the benefits of index investing with its efficient allocation of investment capital driven by investors seeking maximal returns. Less so with government controlled enterprises where corporate profits are sometimes less important than political goals like full employment, low prices for basic materials, pushing banks to lend money, and maintaining low energy prices all of which stimulate economic growth and employment (governmental goals) to the detriment of corporate profits. If you look at sector exposure FNDE has much more exposure to financials, energy, and basic materials--all very cheap value sectors with stagnant recent growth prospects. On the other hand the XSOE is loaded up on fast growth transformative companies in tech, consumer cyclical, and communications sectors. XSOE is much more expensive from a value standpoint but its companies are much faster growing and dynamic in the information economy. As in the US in recent years EM value started out cheap and has only gotten cheaper, while the LCG has only gotten more expensive.

I share Robert's concerns about XSOE in terms of valuation. On the other hand, FNDE is ultra-cheap for solid reasons: huge exposure to stagnant economic sectors and to high levels of government control of business decisions. I'm uncertain which is the best. I do not have Robert T's faith that his patience in value will be rewarded in the end. What I do know with certainty is that FNDE (Schwab's Fundamental EM LC ETF) has underperformed by a considerable margin SCHE (Schwab's cap weighted EM LC ETF) since the inception of FNDE 7 years ago. I find fundamental indexing very appealing in theory but it clearly makes large bets on risky underperforming companies waiting for mean reversion. It offers the possibility of significant outperformance if mean reversion occurs and at the same time considerable tracking error relative to cap weight indexing if reversion doesn't recur.

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Re: If International, what specifically?

Post by Noobvestor »

I TLH'ed out of Total International to Developed Markets because I already held Emerging Markets (all Vanguard indexes) anyway.

So I'm 50/50 US/international, 50/50 developed/emerging. I figure emerging is underrepresented and/or may have higher risk/return, but who knows. Dividing things up into neat slices like that also helps keep me from tinkering with things.
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Re: If International, what specifically?

Post by nedsaid »

Robert T wrote: Sun Aug 23, 2020 7:52 am .
I am becoming increasingly appreciative/aware of potential impacts of state-owned enterprises (SOEs) on EM and Non-US Developed Market stock returns.

The theory is that state owned enterprises (SOEs) distort market incentives (firm efficiency, allocation of capital, and labor productivity) resulting in lower returns on capital invested in these firms than in private firms.

How extensive are SOEs and what impact have they had on the valuation, composition, and performance of Emerging Market Stock Indexes?

Wisdomtree has an Emerging Markets ex-State Owned Enterprise Fund (XSOE) which excluded SOEs (defined as firms that have more than 20% of their shares owned by government entities).

What effects does this have (compared to the iShares MSCI Emerging Markets Index given that the MSCI Emerging Markets stock universe is the starting point for the Wisdomtree fund)?

1. The number of companies is reduced by more than half. More than half the companies in MSCI Emerging Markets Index seem to be SOEs (i.e. have more than 20% of shares owned by government entities). Removing SOEs reduces number of companies in the Index from 1202 to 506.
  • Number of companies in fund:
    1202 = iShares MSCI Emerging Market Index (EEM)
    506 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

2. Valuation goes up. This raises the question then about whether EM stocks are cheap or not. i.e. Are the relatively lower price multiples of EM market indexes just a reflection of ‘political risk’ in SOEs rather than a reflection of cheaper private companies than elsewhere in the world. Historically, has ‘political risk’ been rewarded? And is an emerging market holding just a ‘bet’ on the future pace of SOE reforms in these countries? Will get back to this at end.
  • Price-to-earnings/Price-to-book /Price-to-sales/Price-to-cash flow
    15.7/1.4/1.1/5.6 = iShares MSCI Emerging Market Index (EEM)
    19.2/1.9/1.4/7.9 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

3. Average company size goes up – although not dramatically.
  • Average Market Cap
    45.0bn = iShares MSCI Emerging Market Index (EEM)
    48.3bn = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

4. Recent performance has been better ex-SOEs.

5. Most (the biggest) SOEs are in the financial sector and energy, and the least in communication services, information technology, and consumer discretionary.
  • Financials / Energy portfolio share (%)
    18.2/5.7 = iShares MSCI Emerging Market Index (EEM)
    12.6/4.1 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)
    23.9/19.3 = Schwab Fundamental Emerging Markets (FNDE)
The Wisdomtree article indicates a larger underweight in energy and financials, and a larger overweight in communication services, information technology, and consumer discretionary (table on page 3 of following link). https://www.wisdomtree.com/-/media/us-m ... (xsoe).pdf


Thoughts: An extension of the above is that if SOEs drive lower valuations in emerging markets, then EM value indices will implicitly overweight SOEs. And as SOEs are distortive of market incentives then EM value indices should have lower returns than the overall EM market. The problem with this theory/causality is that EM value has had higher returns than the overall EM market over the long-term (see comparison of FTSE RAFI EM with FTSE EM below, and live returns of DFA EM Value). The relatively poor returns of value in 2020 are not a reflection of SOEs per say, but relatively poor performance of sectors such as energy with COVID lockdowns (earlier this year energy prices fell below the cost of production), and outperformance of communication services/technology with surge in online purchases during COVID. It may be true that EM may also be experiencing the recent tech boom (e.g. Alibaba, Tencent) but since inception of the Wisdomtree XSOE fund to the end 2019, the returns of the Schwab Fundamental EM (EM Value) were slightly higher 7.6% vs. 7.0%
  • Annualized return: 1/1994 – 8/2014
    13.1% = FTSE RAFI Emerging Market Index
    6.4% = FTSE Emerging Market Index
    Why end in 8/2014 - that is when I received these data from Research Affiliates (after requesting it).

    Annualized return: 4/1998 – 6/2020
    8.6% = DFA EM Value
    7.3% = Vanguard EM
    https://www.portfoliovisualizer.com/bac ... ion2_2=100

In short: Widsomtree Emerging Market ex-SOEs [XSOE] is another interesting fund to consider. I currently plan to stick with RAFI EM value but will be open to future research on this topic. Would be interested to see what an ex-SOE EM value fund would look like.

Robert
.
Robert, this is very interesting. I hold the Fidelity Emerging Markets Index, I was aghast when I saw that it was 40% China. I will just say that investor rights, protection, and rule of law are stronger in some parts of the world than others. I may sell 1/2 of my Fidelity Emerging Markets Index and buy the Wisdom Tree product. Recent geo-political events have raised concerns about having so much of my Emerging Markets investments in one country. That is all I will say here.

Edit: XSOE, the Wisdom Tree product is still 40% China. Tencent is 8.91% of the portfolio and Alibaba is 8.60%. In the Fidelity Emerging Markets Index, Alibaba is 6.77% and Tencent is 6.14% of the portfolio. So it doesn't really do what I wanted. We have to live with, I suppose, I higher allocation to China in Emerging Markets funds. I just think 40% is too much. Perhaps I will just switch some funds from Emerging to Developed Markets. This isn't so easy, everything has drawbacks.
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Re: If International, what specifically?

Post by Robert T »

.
One indirect way of potentially owning less state-owned enterprises (SOEs) in emerging markets is through a smaller cap fund e.g. Wisdomtree Emerging Markets Small Cap Dividend ETF (DGS). Have not examined this is detail, but it avoids the larger SOEs that appear in the top 10 holdings of the RAFI EM funds.

PS. EM small cap stock indexes seem to have a lower share of SOEs, but doesn't avoid them altogether. e.g. China Securities Index (CSI) 300 (representing large caps) = 61% SOEs, CIS SmallCap 500 = 47% SOEs.
https://insight.factset.com/investing-i ... nterprises

PPS. Here's a more detailed breakdown from Wisdomtree. So the Wisdomtree Emerging Markets SmallCap Dividend ETF (DGS) has about half the share of SOEs as MSCI Emerging Market Index (30.3% vs. 16.8%)
Last edited by Robert T on Mon Aug 24, 2020 6:49 am, edited 3 times in total.
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Re: If International, what specifically?

Post by Vegomatic »

iShares, fwiw, offers an EM ex (Peoples Republic of) China ETF, EMXC

https://www.ishares.com/us/products/288 ... a-etf-fund
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Re: If International, what specifically?

Post by Doc »

brad.clarkston wrote: Fri Aug 21, 2020 11:21 am DFA International Small Cap Value I DISVX would be the one I'd take if I could get it without giving them my entire port.
Change brokers. "Minimum: $2,500" Not likely to be your entire portfolio.
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Re: If International, what specifically?

Post by brad.clarkston »

Doc wrote: Mon Aug 24, 2020 9:42 am
brad.clarkston wrote: Fri Aug 21, 2020 11:21 am DFA International Small Cap Value I DISVX would be the one I'd take if I could get it without giving them my entire port.
Change brokers. "Minimum: $2,500" Not likely to be your entire portfolio.
True but I can't just get access to DISVX as far as I've seen (no 401k/ira options).
I would have to move my port over to DFA which I would rather not do as Fidelity has more flexibility.
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Re: If International, what specifically?

Post by rascott »

Robert T wrote: Mon Aug 24, 2020 5:22 am .
One indirect way of potentially owning less state-owned enterprises (SOEs) in emerging markets is through a smaller cap fund e.g. Wisdomtree Emerging Markets Small Cap Dividend ETF (DGS). Have not examined this is detail, but it avoids the larger SOEs that appear in the top 10 holdings of the RAFI EM funds.

PS. EM small cap stock indexes seem to have a lower share of SOEs, but doesn't avoid them altogether. e.g. China Securities Index (CSI) 300 (representing large caps) = 61% SOEs, CIS SmallCap 500 = 47% SOEs.
https://insight.factset.com/investing-i ... nterprises

PPS. Here's a more detailed breakdown from Wisdomtree. So the Wisdomtree Emerging Markets SmallCap Dividend ETF (DGS) has about half the share of SOEs as MSCI Emerging Market Index (30.3% vs. 16.8%)

Hence the problem one runs into when digging very deep on many international funds. It just becomes a fairly unattractive investment all around. My relatively small intl holdings (15%) are mostly in small cap funds (including some DGS).
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Re: If International, what specifically?

Post by Broken Man 1999 »

rascott wrote: Mon Aug 24, 2020 11:03 am
Robert T wrote: Mon Aug 24, 2020 5:22 am .
One indirect way of potentially owning less state-owned enterprises (SOEs) in emerging markets is through a smaller cap fund e.g. Wisdomtree Emerging Markets Small Cap Dividend ETF (DGS). Have not examined this is detail, but it avoids the larger SOEs that appear in the top 10 holdings of the RAFI EM funds.

PS. EM small cap stock indexes seem to have a lower share of SOEs, but doesn't avoid them altogether. e.g. China Securities Index (CSI) 300 (representing large caps) = 61% SOEs, CIS SmallCap 500 = 47% SOEs.
https://insight.factset.com/investing-i ... nterprises

PPS. Here's a more detailed breakdown from Wisdomtree. So the Wisdomtree Emerging Markets SmallCap Dividend ETF (DGS) has about half the share of SOEs as MSCI Emerging Market Index (30.3% vs. 16.8%)

Hence the problem one runs into when digging very deep on many international funds. It just becomes a fairly unattractive investment all around. My relatively small intl holdings (15%) are mostly in small cap funds (including some DGS).
"....It just becomes a fairly unattractive investment all around...." (My bold)

I can't disagree with your statement I bolded.

I guess my best bet for international is to pick a mutual fund/ETF that offends my olfactory organ the least! I say that at this moment, though, I still have some more reading to do. Perhaps there is a diamond hiding in the dung.

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Re: If International, what specifically?

Post by grabiner »

Assuming the costs are consistent, it makes sense to bias your international stocks the same way you bias your US stocks. If you hold Total Stock Market, you should hold Total International. If you overweight small-cap in the US, you should overweight small-cap international. If you overweight either small-cap or value in the US (favoring riskier stocks), you might overweight emerging markets.

But costs are an issue. If you overweight value in the US, you may want a lower overweight to value in foreign stock, because the cost difference is greater. Vanguard offers US value for only a small cost over US blend (Value Index, Small-Cap Value Index, or Vanguard Factor Value ETF if you want deeper exposure). For international value, Vanguard has no ETF; the best options are probably iShares EAFE Factor Value (IVLU) for large-cap value (0.30% expense) and Avantis International Small-Cap Value (AVDV)for small-cap value (0.36% expense). And there is no emerging markets small-cap ETF at a reasonable cost, so even if you overweight both small-cap and emerging markets, you may not want to hold a separate fund to overweight small-cap emerging; overweight it only with the emerging markets in your small-cap index and the small-cap in your emerging-markets index.

I have all these overweights. I prefer to increase the risk of my portfolio by holding riskier stocks rather than more stocks, as I get exposure to more different risks which may not be correlated. So I overweight small-cap, value, and emerging markets. My foreign overweights come from Vanguard FTSE All-World Ex-US Small-Cap (VSS), Vanguard Emerging Markets (VWO, although I hold the mutual fund class VEMAX), and IVLU. I am looking at AVDV but haven't bought it yet; in particular, I would like to see the tax efficiency this year, as I would have to hold it in a taxable account.
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Re: If International, what specifically?

Post by bayview »

VFSAX (Vanguard FTSE All-World ex-US Small-Cap Index Fund Admiral Shares) (VSS) No other international.

It’s all-world, including EM, and it’s a bit less correlated to total US. Back-testing shows it has done better than total international, although that and a few bucks will buy you a beer.

Edit to add: here’s the link to details on the holdings. Slide down (below the regional pie chart) for country breakdown. As of 7/31/2020, China is 6.1%, and Hong Kong is 1.1%.

https://investor.vanguard.com/mutual-fu ... olio/vfsax
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Re: If International, what specifically?

Post by Broken Man 1999 »

nedsaid wrote: Sun Aug 23, 2020 3:04 pm
Robert T wrote: Sun Aug 23, 2020 7:52 am .
I am becoming increasingly appreciative/aware of potential impacts of state-owned enterprises (SOEs) on EM and Non-US Developed Market stock returns.

The theory is that state owned enterprises (SOEs) distort market incentives (firm efficiency, allocation of capital, and labor productivity) resulting in lower returns on capital invested in these firms than in private firms.

How extensive are SOEs and what impact have they had on the valuation, composition, and performance of Emerging Market Stock Indexes?

Wisdomtree has an Emerging Markets ex-State Owned Enterprise Fund (XSOE) which excluded SOEs (defined as firms that have more than 20% of their shares owned by government entities).

What effects does this have (compared to the iShares MSCI Emerging Markets Index given that the MSCI Emerging Markets stock universe is the starting point for the Wisdomtree fund)?

1. The number of companies is reduced by more than half. More than half the companies in MSCI Emerging Markets Index seem to be SOEs (i.e. have more than 20% of shares owned by government entities). Removing SOEs reduces number of companies in the Index from 1202 to 506.
  • Number of companies in fund:
    1202 = iShares MSCI Emerging Market Index (EEM)
    506 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

2. Valuation goes up. This raises the question then about whether EM stocks are cheap or not. i.e. Are the relatively lower price multiples of EM market indexes just a reflection of ‘political risk’ in SOEs rather than a reflection of cheaper private companies than elsewhere in the world. Historically, has ‘political risk’ been rewarded? And is an emerging market holding just a ‘bet’ on the future pace of SOE reforms in these countries? Will get back to this at end.
  • Price-to-earnings/Price-to-book /Price-to-sales/Price-to-cash flow
    15.7/1.4/1.1/5.6 = iShares MSCI Emerging Market Index (EEM)
    19.2/1.9/1.4/7.9 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

3. Average company size goes up – although not dramatically.
  • Average Market Cap
    45.0bn = iShares MSCI Emerging Market Index (EEM)
    48.3bn = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)

4. Recent performance has been better ex-SOEs.

5. Most (the biggest) SOEs are in the financial sector and energy, and the least in communication services, information technology, and consumer discretionary.
  • Financials / Energy portfolio share (%)
    18.2/5.7 = iShares MSCI Emerging Market Index (EEM)
    12.6/4.1 = Wisdomtree Emerging Markets ex-SOE Fund (XSOE)
    23.9/19.3 = Schwab Fundamental Emerging Markets (FNDE)
The Wisdomtree article indicates a larger underweight in energy and financials, and a larger overweight in communication services, information technology, and consumer discretionary (table on page 3 of following link). https://www.wisdomtree.com/-/media/us-m ... (xsoe).pdf


Thoughts: An extension of the above is that if SOEs drive lower valuations in emerging markets, then EM value indices will implicitly overweight SOEs. And as SOEs are distortive of market incentives then EM value indices should have lower returns than the overall EM market. The problem with this theory/causality is that EM value has had higher returns than the overall EM market over the long-term (see comparison of FTSE RAFI EM with FTSE EM below, and live returns of DFA EM Value). The relatively poor returns of value in 2020 are not a reflection of SOEs per say, but relatively poor performance of sectors such as energy with COVID lockdowns (earlier this year energy prices fell below the cost of production), and outperformance of communication services/technology with surge in online purchases during COVID. It may be true that EM may also be experiencing the recent tech boom (e.g. Alibaba, Tencent) but since inception of the Wisdomtree XSOE fund to the end 2019, the returns of the Schwab Fundamental EM (EM Value) were slightly higher 7.6% vs. 7.0%
  • Annualized return: 1/1994 – 8/2014
    13.1% = FTSE RAFI Emerging Market Index
    6.4% = FTSE Emerging Market Index
    Why end in 8/2014 - that is when I received these data from Research Affiliates (after requesting it).

    Annualized return: 4/1998 – 6/2020
    8.6% = DFA EM Value
    7.3% = Vanguard EM
    https://www.portfoliovisualizer.com/bac ... ion2_2=100

In short: Widsomtree Emerging Market ex-SOEs [XSOE] is another interesting fund to consider. I currently plan to stick with RAFI EM value but will be open to future research on this topic. Would be interested to see what an ex-SOE EM value fund would look like.

Robert
.
Robert, this is very interesting. I hold the Fidelity Emerging Markets Index, I was aghast when I saw that it was 40% China. I will just say that investor rights, protection, and rule of law are stronger in some parts of the world than others. I may sell 1/2 of my Fidelity Emerging Markets Index and buy the Wisdom Tree product. Recent geo-political events have raised concerns about having so much of my Emerging Markets investments in one country. That is all I will say here.

Edit: XSOE, the Wisdom Tree product is still 40% China. Tencent is 8.91% of the portfolio and Alibaba is 8.60%. In the Fidelity Emerging Markets Index, Alibaba is 6.77% and Tencent is 6.14% of the portfolio. So it doesn't really do what I wanted. We have to live with, I suppose, I higher allocation to China in Emerging Markets funds. I just think 40% is too much. Perhaps I will just switch some funds from Emerging to Developed Markets. This isn't so easy, everything has drawbacks.
I agree with your thought process, and that is all I will say here! :thumbsup

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“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
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Re: If International, what specifically?

Post by Doc »

brad.clarkston wrote: Mon Aug 24, 2020 10:41 am
Doc wrote: Mon Aug 24, 2020 9:42 am
brad.clarkston wrote: Fri Aug 21, 2020 11:21 am DFA International Small Cap Value I DISVX would be the one I'd take if I could get it without giving them my entire port.
Change brokers. "Minimum: $2,500" Not likely to be your entire portfolio.
True but I can't just get access to DISVX as far as I've seen (no 401k/ira options).
I would have to move my port over to DFA which I would rather not do as Fidelity has more flexibility.
No there are other brokers with small minimums that do offer 401k/ira options.

I just logged into Fidelity and my choice of accounts had 2 (now closed) IRA's listed.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.
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