VWO (emerg markets) very disappointing performance

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
ilan1h
Posts: 803
Joined: Mon Oct 22, 2007 3:40 pm

VWO (emerg markets) very disappointing performance

Post by ilan1h »

My asset allocation is calling for more VWO which comprises less than 3% of my portfolio. However, according to portfoliovisualizer this ETF has been underperfoming for almost 13 yrs! The SP500 has beaten it by close to 100% during this time and, even worse, it has been a very rough ride with VWO. Max drawdown of 62%, SD of 22% and worst year of 53%. I think that's one of the most volatile rides I"ve ever seen in any sector.
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

I dumped emerging markets this year. A small allocation seemed unlikely to move the needle, and a large allocation seemed to add a lot of uncompensated risk. YMMV and good luck.
User avatar
zaboomafoozarg
Posts: 2166
Joined: Sun Jun 12, 2011 12:34 pm

Re: VWO (emerg markets) very disappointing performance

Post by zaboomafoozarg »

I have about 10% of my total AA in emerging markets. It was tough balancing into it when it dropped back in March/April, but it's doubled since then. And the PE is still only about 13.

It hasn't done very good for a while, but I plan to keep it for the long run.
User avatar
Noobvestor
Posts: 5644
Joined: Mon Aug 23, 2010 1:09 am

Re: VWO (emerg markets) very disappointing performance

Post by Noobvestor »

If we're going based purely on performance from the past decade or so, why not go all-in on large cap US tech?
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
dru808
Posts: 951
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: VWO (emerg markets) very disappointing performance

Post by dru808 »

You probably shouldn’t have held it in the first place. Why did you buy it, was it on fire when you bought high?
60% SCHK | 25% VIGI | 15% ILTB
User avatar
camper
Posts: 868
Joined: Thu Dec 04, 2008 11:51 pm
Location: My side of the mountain

Re: VWO (emerg markets) very disappointing performance

Post by camper »

Why are you comparing the performance of an emerging markets fund to the performance of the S&P 500? Apples vs. giraffes.
TIAX
Posts: 1362
Joined: Sat Jan 11, 2014 12:19 pm

Re: VWO (emerg markets) very disappointing performance

Post by TIAX »

000 wrote: Sat Oct 17, 2020 8:43 pm I dumped emerging markets this year. A small allocation seemed unlikely to move the needle, and a large allocation seemed to add a lot of uncompensated risk. YMMV and good luck.
How is it "uncompensated risk"?
User avatar
JoMoney
Posts: 9761
Joined: Tue Jul 23, 2013 5:31 am

Re: VWO (emerg markets) very disappointing performance

Post by JoMoney »

I don't have an international allocation, but for those that do, and do so looking for some "portfolio correlation/diversification benefit", I would think EM would be the most likely place to find it.
Being uncorrelated sometimes means one performs well while the other one doesn't :annoyed
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
YRT70
Posts: 681
Joined: Sat Apr 27, 2019 8:51 am

Re: VWO (emerg markets) very disappointing performance

Post by YRT70 »

VWO returned 1.19% over the last 13 years. I agree it's very disappointing.

It's a region where tilting to small value would have helped. DGS (WisdomTree Emerging Markets SmCp Div ETF) returned 2.54% in spite of its high TER of 0.63%.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Johm221122
Posts: 5145
Joined: Fri May 13, 2011 6:27 pm

Re: VWO (emerg markets) very disappointing performance

Post by Johm221122 »

ilan1h wrote: Sat Oct 17, 2020 8:38 pm My asset allocation is calling for more VWO which comprises less than 3% of my portfolio. However, according to portfoliovisualizer this ETF has been underperfoming for almost 13 yrs! The SP500 has beaten it by close to 100% during this time and, even worse, it has been a very rough ride with VWO. Max drawdown of 62%, SD of 22% and worst year of 53%. I think that's one of the most volatile rides I"ve ever seen in any sector.
I wouldn't hold any asset class at 3% of my portfolio. Not worth the effort.
But I wouldn't dump an asset class because of a 13 year period.
xerxes101
Posts: 357
Joined: Sat Oct 14, 2017 11:25 am

Re: VWO (emerg markets) very disappointing performance

Post by xerxes101 »

At roughly about 5% allocation, I don't view VWO's role in the portfolio strictly as a performance booster right now, I view it as a means for diversification and holding an uncorrelated asset class.
User avatar
Forester
Posts: 1544
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: VWO (emerg markets) very disappointing performance

Post by Forester »

S&P 500 also did nothing for 13 years 1999-2012. And emerging markets were in a similar valuation bubble in late 2007 as the USA was in late 1999. The diversification benefit of ex-US (and/or Value) may be more obvious if megacap US stocks & US govt bonds have a concurrent bear market.

I think it's better to hold global stock funds. Be sure to own the Japanese bubble, US dotcom bubble, EM 2000s bubble and so on, especially as a retiree.
User avatar
Makaveli
Posts: 672
Joined: Mon May 19, 2014 11:18 pm

Re: VWO (emerg markets) very disappointing performance

Post by Makaveli »

VWO and VSS (international small cap) are the two funds I hold in my rIRA. They’ve gone practically no where for 8 years. Essentially see my contributions for the balance. Frustrating for sure, have had the thought of switching to US in rIRA and adding these tilts to taxable so I can TLH (less tax efficient though), ultimately plan to stay the course.

Some of the smartest folks have always said that various AA’s (generally speaking) will not be the aspect that craters your investments, it’s the bouncing around and not staying the course.
HawkeyePierce
Posts: 1467
Joined: Tue Mar 05, 2019 10:29 pm
Location: Colorado

Re: VWO (emerg markets) very disappointing performance

Post by HawkeyePierce »

Diversification means some of your asset classes are disappointing at times. I hold an EM allocation and I have no plans to dump it.

Also, VWO is up 17% over the last two years. That may not be FAANG territory but it's not nothing.
User avatar
nisiprius
Advisory Board
Posts: 41937
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: VWO (emerg markets) very disappointing performance

Post by nisiprius »

xerxes101 wrote: Sun Oct 18, 2020 5:04 am At roughly about 5% allocation, I don't view VWO's role in the portfolio strictly as a performance booster right now, I view it as a means for diversification and holding an uncorrelated asset class.
5% isn't going to move the needle much on diversification or correlation, either.

And "uncorrelated" means ρ=0.0, while the correlation between the Vanguard Total [US] Stock Market Fund, VTSMX, and the Emerging Markets Index Fund, VEIEX, has been 0.77. That's not "uncorrelated." In a statistics class or a medical study that would be "highly correlated." It's certainly not a powerfully low correlation. And low correlation always has to be balanced against the main point, risk-adjusted return.

Simply because something does not have 1.00 correlation with a portfolio does not automatically mean it will improve a portfolio. What the low correlation thing means is that a blend of several decent investments may synergize if they have low correlation, but they need to be decent investments on their own. You shouldn't add something just for low correlation unless you believe it will be roughly on a par with your other holdings in risk-adjusted return.

That's not to say emerging markets won't be a decent investment, just that you shouldn't hold something for "low correlation" unless you also think it is a good investment in its own right.

Of course, a 5% allocation can't hurt much, either.
Last edited by nisiprius on Sun Oct 18, 2020 11:37 am, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
wander
Posts: 3235
Joined: Sat Oct 04, 2008 9:10 am

Re: VWO (emerg markets) very disappointing performance

Post by wander »

Emerging market was flying high in the 90s. I too have around 10% of this ETF, I can feel your pain. :D
User avatar
nisiprius
Advisory Board
Posts: 41937
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: VWO (emerg markets) very disappointing performance

Post by nisiprius »

Here's how much difference an extra 3%-of-portfolio allocation to emerging markets would have made in a portfolio of 42% Total [US] Stock, 18% Total International, 40% Total Bond. Keep things in perspective. Run numbers on whole portfolios, don't listen to verbal descriptions of ups and downs of parts of them.

Since inception of VGTSX, Total International:
May 1996 - Sep 2020

Image

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
afan
Posts: 5203
Joined: Sun Jul 25, 2010 4:01 pm

Re: VWO (emerg markets) very disappointing performance

Post by afan »

I hold EM at market weight. Whatever that is within Vanguard total international stock.

Much simpler than thinking I can out smart the market as to what that weight should be.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
ChinchillaWhiplash
Posts: 885
Joined: Sat Jan 20, 2018 5:40 pm
Location: Land of Hypoxia

Re: VWO (emerg markets) very disappointing performance

Post by ChinchillaWhiplash »

If you want diversification and lower correlation to US equities, VWOB might do better. Seems to be a lot less volatile also.
User avatar
sperry8
Posts: 2193
Joined: Sat Mar 29, 2008 9:25 pm
Location: Miami FL

Re: VWO (emerg markets) very disappointing performance

Post by sperry8 »

ilan1h wrote: Sat Oct 17, 2020 8:38 pm My asset allocation is calling for more VWO which comprises less than 3% of my portfolio. However, according to portfoliovisualizer this ETF has been underperfoming for almost 13 yrs! The SP500 has beaten it by close to 100% during this time and, even worse, it has been a very rough ride with VWO. Max drawdown of 62%, SD of 22% and worst year of 53%. I think that's one of the most volatile rides I"ve ever seen in any sector.
The way to beat the market, if that is what you're trying to do, is buy low and sell high. So adding more of a beat up sector after a decade is potentially buying low. If you added more to Large Cap Tech, you'd be buying high. Basically, rebalance your monies into the AA's that have underperformed rather than those that have outperformed. And over the long term... you may have an edge.

The results you're describing have already happened. They do not tell you what will happen. But if you believe that all assets eventually generate similar returns, buy more of the worst of what already happened. Then stay the course.
BH contest results: 2019: #233 of 645 | 18: #150 of 493 | 17: #516 of 647 | 16: #121 of 610 | 15: #18 of 552 | 14: #225 of 503 | 13: #383 of 433 | 12: #366 of 410 | 11: #113 of 369 | 10: #53 of 282
Bayliss
Posts: 1
Joined: Sun Oct 18, 2020 2:02 pm

Re: VWO (emerg markets) very disappointing performance

Post by Bayliss »

I think it is better to just hold VEA or VEU instead, even over VXUS. Emerging markets at one time may have been worthwhile but the world is tapped out with new growth from countries (IMO).
stimulacra
Posts: 785
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: VWO (emerg markets) very disappointing performance

Post by stimulacra »

I hold the admiral fund equivalent at around 8% of assets. It's done ok thus far, I've rebalanced into it and out of it over the last 5 years.

I don't hold it for performance.
absolute zero
Posts: 477
Joined: Thu Dec 29, 2016 4:59 pm

Re: VWO (emerg markets) very disappointing performance

Post by absolute zero »

ChinchillaWhiplash wrote: Sun Oct 18, 2020 1:36 pm If you want diversification and lower correlation to US equities, VWOB might do better. Seems to be a lot less volatile also.
Better diversification, although lower expected returns.
Day9
Posts: 986
Joined: Mon Jun 11, 2012 6:22 pm

Re: VWO (emerg markets) very disappointing performance

Post by Day9 »

TIAX wrote: Sun Oct 18, 2020 1:16 am
000 wrote: Sat Oct 17, 2020 8:43 pm I dumped emerging markets this year. A small allocation seemed unlikely to move the needle, and a large allocation seemed to add a lot of uncompensated risk. YMMV and good luck.
How is it "uncompensated risk"?
I hold international and emerging market stock investments myself. But arguments I've heard from the 100% US folks include unhedged international funds have currency risk that is not compensated. And a new argument I heard asked to consider an investor in USA where laws are relatively favorable with an investor in an emerging market country where the laws are not as friendly and less certain at that. For the investor in that emerging markets country, both his home country investments and his US stock he buys could be under political risks. But for the US investor, his US investments are safer from political risks but his emerging markets investments have that same political risk. So therefore that political risk is uncompensated. I'd appreciate it if someone responded to this argument because it was new to me.
I'm just a fan of the person I got my user name from
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

TIAX wrote: Sun Oct 18, 2020 1:16 am
000 wrote: Sat Oct 17, 2020 8:43 pm I dumped emerging markets this year. A small allocation seemed unlikely to move the needle, and a large allocation seemed to add a lot of uncompensated risk. YMMV and good luck.
How is it "uncompensated risk"?
1. Most investors have home bias.
2. Most national stock markets have home ownership bias.
3. The prices of securities are set by the cap-weighted average investor participating in the market.
4. Usually, investors investing in their own country face less political risk than they would investing in foreign jurisdictions.
5. Thus the national stock market of a particular country does not fully price the risk of foreigners investing in it.
6. Thus the additional risk I take on investing in a foreign country versus my home country is uncompensated by market pricing.

As evidence of (1) and (2), I encourage study of the capital restrictions China and India place on their residents. Also, the fact that most investors worldwide have home bias suggests that domicile risk is real. If one is going to accept the wisdom of crowds regarding world market cap, why not also accept the wisdom of crowds regarding home bias?

In my opinion, the uncompensated risk for a US person is modest-to-high for VWO and mild for VEA. I am willing to accept a little uncompensated risk for greater diversification; there is probably some point where overconcentration in one's home country becomes uncompensated risk too. YMMV.
Last edited by 000 on Sun Oct 18, 2020 4:07 pm, edited 1 time in total.
columbia
Posts: 2923
Joined: Tue Aug 27, 2013 5:30 am

Re: VWO (emerg markets) very disappointing performance

Post by columbia »

If one is going to accept the wisdom of crowds regarding world market cap, why not also accept the wisdom of crowds regarding home bias?
Touche
Day9
Posts: 986
Joined: Mon Jun 11, 2012 6:22 pm

Re: VWO (emerg markets) very disappointing performance

Post by Day9 »

000 wrote: Sun Oct 18, 2020 3:33 pm ...
In my opinion, the uncompensated risk for a US person is modest-to-high for VWO and mild for VEA. I am willing to accept a little uncompensated risk for greater diversification; there is probably some point where overconcentration in one's home country becomes uncompensated risk too. YMMV.
I would be curious to see an attempt to quantify this kind of risk and compare it to other kinds of risks, or at least a more thorough investigation of this concept. Because I can imagine it being significant or on the other hand being dominated by other more traditional kinds of risk.
I'm just a fan of the person I got my user name from
User avatar
SB1234
Posts: 228
Joined: Sat Mar 10, 2018 7:41 pm
Location: Laniakea

Re: VWO (emerg markets) very disappointing performance

Post by SB1234 »

viewtopic.php?t=245438
Will fast-growing emerging markets be the global equity winners in the decades to come? At first blush, it makes great sense, since the emerging economies today are growing at more than four times the pace of the developed economies. Won't this rapid GDP growth translate into outsized earnings growth and stock returns?

The "fly in the ointment" for emerging market investors is that stock price growth depends not on aggregate earnings — it's earnings-per-share that matters. Looking at the past ten years, comparing the annual GDP growth rates of the major emerging and developed economies (table below), emerging markets have been the clear winners, 4.5% to 1.1% real — however, developed markets had the better EPS growth rates, -1.0% to -1.6% real. What gives?

Image
NOTE: Averages are simple arithmetic of the 6 major emerging and developed markets.
Data Source: Schroders

The key factor, for emerging markets as a whole, is that even though aggregate earnings growth has generally been strong, the number of shares increased much faster than earnings. In fast-growing economies, the creation of new firms and the flotation of new shares is behind the vast majority of their growth — which dilutes the EPS for existing shareholders (table below).

Image
NOTE: Averages are simple arithmetic of the 6 markets.
Data Source: Schroders

BOTTOM LINE: While it makes sense to allocate part of one's equity portfolio to emerging markets, one shouldn't go overboard on the promise of rapid economic growth, and shortchange the slower-growing developed markets of the world.

Your thoughts
anecdotes are not data
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

Day9 wrote: Sun Oct 18, 2020 4:25 pm
000 wrote: Sun Oct 18, 2020 3:33 pm ...
In my opinion, the uncompensated risk for a US person is modest-to-high for VWO and mild for VEA. I am willing to accept a little uncompensated risk for greater diversification; there is probably some point where overconcentration in one's home country becomes uncompensated risk too. YMMV.
I would be curious to see an attempt to quantify this kind of risk and compare it to other kinds of risks, or at least a more thorough investigation of this concept. Because I can imagine it being significant or on the other hand being dominated by other more traditional kinds of risk.
I don't know how to measure with precision the probability that X country decides sometime in the future that foreigners have no property rights.
User avatar
Uncorrelated
Posts: 1019
Joined: Sun Oct 13, 2019 3:16 pm

Re: VWO (emerg markets) very disappointing performance

Post by Uncorrelated »

000 wrote: Sun Oct 18, 2020 3:33 pm
TIAX wrote: Sun Oct 18, 2020 1:16 am
000 wrote: Sat Oct 17, 2020 8:43 pm I dumped emerging markets this year. A small allocation seemed unlikely to move the needle, and a large allocation seemed to add a lot of uncompensated risk. YMMV and good luck.
How is it "uncompensated risk"?
1. Most investors have home bias.
2. Most national stock markets have home ownership bias.
3. The prices of securities are set by the cap-weighted average investor participating in the market.
4. Usually, investors investing in their own country face less political risk than they would investing in foreign jurisdictions.
5. Thus the national stock market of a particular country does not fully price the risk of foreigners investing in it.
6. Thus the additional risk I take on investing in a foreign country versus my home country is uncompensated by market pricing.

As evidence of (1) and (2), I encourage study of the capital restrictions China and India place on their residents. Also, the fact that most investors worldwide have home bias suggests that domicile risk is real. If one is going to accept the wisdom of crowds regarding world market cap, why not also accept the wisdom of crowds regarding home bias?

In my opinion, the uncompensated risk for a US person is modest-to-high for VWO and mild for VEA. I am willing to accept a little uncompensated risk for greater diversification; there is probably some point where overcompensation in one's home country becomes uncompensated risk too. YMMV.
Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average, and japanese investors believe that their market outperforms the US 3.5% on average. This cannot be explained by rational home bias, political risk, or tax advantages. Not withstanding that foreign currency risks can be hedged away at negligible cost (<0.1% annually). Ken French argues that incomplete diversification is a result of investor choices, fear and investor bias rather than rational maximization of expected utility.

According to Households’ Wealth Composition Across OECD Countries and Financial Risks Borne by Households table 1, US households hold a much greater percentage of their wealth in non-cash assets than every other country. If investors in different countries have similar home bias, but US investors hold much more stocks on average, that implies that the US stock market is much more overpriced than other stock markets.

Straying away from market-cap weighted portfolio's is an active bet. Active bets should be supported with extremely high quality evidence. This evidence can effectively never be produced: if the US has a 1% higher expected return than international, then we need several hundred years before the difference is statistically significant at the 5% significance threshold. For reference, some factors are statistically significant at the 1% significance threshold in around 20 to 40 years years. To my knowledge no factors are yet discovered that can explain differences in expected return between countries, this makes active betting on countries an extremely dubious endeavor.
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

Uncorrelated wrote: Sun Oct 18, 2020 5:12 pm Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average, and japanese investors believe that their market outperforms the US 3.5% on average. This cannot be explained by rational home bias, political risk, or tax advantages. Not withstanding that foreign currency risks can be hedged away at negligible cost (<0.1% annually). Ken French argues that incomplete diversification is a result of investor choices, fear and investor bias rather than rational maximization of expected utility.

According to Households’ Wealth Composition Across OECD Countries and Financial Risks Borne by Households table 1, US households hold a much greater percentage of their wealth in non-cash assets than every other country. If investors in different countries have similar home bias, but US investors hold much more stocks on average, that implies that the US stock market is much more overpriced than other stock markets.

Straying away from market-cap weighted portfolio's is an active bet. Active bets should be supported with extremely high quality evidence. This evidence can effectively never be produced: if the US has a 1% higher expected return than international, then we need several hundred years before the difference is statistically significant at the 5% significance threshold. For reference, some factors are statistically significant at the 1% significance threshold in around 20 to 40 years years. To my knowledge no factors are yet discovered that can explain differences in expected return between countries, this makes active betting on countries an extremely dubious endeavor.
Assuming your facts are correct, I believe you are misinterpreting them.

First, the fact that US investors hold much more stocks does not mean US stocks are overpriced, unless US investors decide to hold much less stocks in the future (or, relative to ex-US performance, ex-US investors decide to hold much more ex-US stocks in the future). Speculating on whether or not that will happen is an active bet and, moreover, one that is inconsistent with the political trends that encourage US investors to hold relatively more stocks (e.g. personal responsibility vs. government support).

Second, the fact that Japanese investors believe their stocks will outperform by even more than US investors do suggests that, by your reasoning that US home bias results in overpricing of US stocks, Japanese stocks are even more overpriced that US stocks.

Moreover, you are missing my points. I have not said I expect US stocks to outperform International stocks, not do I believe International stocks should be completed eschewed; this thread is about Emerging Markets stocks, and the fact that EM national stock markets have significant home bias suggests to me that the market pricing in those markets does not fully incorporate foreigner investment risk.

Finally, the US has consistently -- and sometimes significantly -- outperformed others' expectations since its founding.
Day9
Posts: 986
Joined: Mon Jun 11, 2012 6:22 pm

Re: VWO (emerg markets) very disappointing performance

Post by Day9 »

000 wrote: Sun Oct 18, 2020 5:11 pm
Day9 wrote: Sun Oct 18, 2020 4:25 pm
000 wrote: Sun Oct 18, 2020 3:33 pm ...
In my opinion, the uncompensated risk for a US person is modest-to-high for VWO and mild for VEA. I am willing to accept a little uncompensated risk for greater diversification; there is probably some point where overconcentration in one's home country becomes uncompensated risk too. YMMV.
I would be curious to see an attempt to quantify this kind of risk and compare it to other kinds of risks, or at least a more thorough investigation of this concept. Because I can imagine it being significant or on the other hand being dominated by other more traditional kinds of risk.
I don't know how to measure with precision the probability that X country decides sometime in the future that foreigners have no property rights.
I would still be interested in a less-precise investigation. For example, what led you to conclude "modest-to-high" risk in emerging markets and "mild" risk in developed international?
I'm just a fan of the person I got my user name from
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

Day9 wrote: Sun Oct 18, 2020 5:45 pm I would still be interested in a less-precise investigation. For example, what led you to conclude "modest-to-high" risk in emerging markets and "mild" risk in developed international?
Top countries in VEA are US allies or historically neutral but friendly, top countries in VWO are non-aligned with US or of disputed status.
User avatar
nisiprius
Advisory Board
Posts: 41937
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: VWO (emerg markets) very disappointing performance

Post by nisiprius »

Uncorrelated wrote: Sun Oct 18, 2020 5:12 pm...Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average... This cannot be explained by rational home bias, political risk, or tax advantages...
Can 2% of that 2.5% possibly be explained by the historic fact that the real return of stocks from 1900-2016, CAGR, was

--4.3% annualized for the world ex-US
--6.4% for the US?

Of course, you can get almost any desired result by selecting the date range--which is why I'm reproducing their full chart and not just picking one number from it. And you can usually articulate a reason why the one you chose is the appropriate one. We can certainly argue about it, but wouldn't that be a legitimate source of "rational" home bias?

Source: Credit Suisse Investment Returns Yearbook for 2017. (Why 2017? Because that's the last year the no-cost edition included the ex-US numbers).

Image

Image
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
User avatar
Uncorrelated
Posts: 1019
Joined: Sun Oct 13, 2019 3:16 pm

Re: VWO (emerg markets) very disappointing performance

Post by Uncorrelated »

000 wrote: Sun Oct 18, 2020 5:23 pm
Uncorrelated wrote: Sun Oct 18, 2020 5:12 pm Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average, and japanese investors believe that their market outperforms the US 3.5% on average. This cannot be explained by rational home bias, political risk, or tax advantages. Not withstanding that foreign currency risks can be hedged away at negligible cost (<0.1% annually). Ken French argues that incomplete diversification is a result of investor choices, fear and investor bias rather than rational maximization of expected utility.

According to Households’ Wealth Composition Across OECD Countries and Financial Risks Borne by Households table 1, US households hold a much greater percentage of their wealth in non-cash assets than every other country. If investors in different countries have similar home bias, but US investors hold much more stocks on average, that implies that the US stock market is much more overpriced than other stock markets.

Straying away from market-cap weighted portfolio's is an active bet. Active bets should be supported with extremely high quality evidence. This evidence can effectively never be produced: if the US has a 1% higher expected return than international, then we need several hundred years before the difference is statistically significant at the 5% significance threshold. For reference, some factors are statistically significant at the 1% significance threshold in around 20 to 40 years years. To my knowledge no factors are yet discovered that can explain differences in expected return between countries, this makes active betting on countries an extremely dubious endeavor.
Assuming your facts are correct, I believe you are misinterpreting them.

First, the fact that US investors hold much more stocks does not mean US stocks are overpriced, unless US investors decide to hold much less stocks in the future (or, relative to ex-US performance, ex-US investors decide to hold much more ex-US stocks in the future). Speculating on whether or not that will happen is an active bet and, moreover, one that is inconsistent with the political trends that encourage US investors to hold relatively more stocks (e.g. personal responsibility vs. government support).

Second, the fact that Japanese investors believe their stocks will outperform by even more than US investors do suggests that, by your reasoning that US home bias results in overpricing of US stocks, Japanese stocks are even more overpriced that US stocks.

Moreover, you are missing my points. I have not said I expect US stocks to outperform International stocks, not do I believe International stocks should be completed eschewed; this thread is about Emerging Markets stocks, and the fact that EM national stock markets have significant home bias suggests to me that the market pricing in those markets does not fully incorporate foreigner investment risk.

Finally, the US has consistently -- and sometimes significantly -- outperformed others' expectations since its founding.
If stocks are overpriced and they continue to be overpriced in the future, that means the expected returns is lower. A stock that generates $1 of profit per share is still going to produce $1 of profit per share when the stock price is higher.

Countries exhibit a home bias. I wouldn't be surprised if states exhibit a home bias, and geographic regions exhibit a home bias. Ken French argues that home bias can be supported only if there is significant variation in expected return, can you show that your preference for developed markets are more rational than emerging markets preference for emerging markets?

The US has never outperformed expectations according to any statistically valid expectation. There simply isn't enough data to conclude that. If the US has an expected return of 6.0 for 100 years and the expected return then drops to 4.0 for the 100 years thereafter, it's unlikely that we will be able to conclude that the expected return was different between the two time periods. The measurement error introduced by volatility is just that large.
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

Uncorrelated wrote: Sun Oct 18, 2020 6:13 pm The US has never outperformed expectations according to any statistically valid expectation. There simply isn't enough data to conclude that. If the US has an expected return of 6.0 for 100 years and the expected return then drops to 4.0 for the 100 years thereafter, it's unlikely that we will be able to conclude that the expected return was different between the two time periods. The measurement error introduced by volatility is just that large.
This is just absurd. Please restudy European and US history, 1600 - present.
User avatar
Uncorrelated
Posts: 1019
Joined: Sun Oct 13, 2019 3:16 pm

Re: VWO (emerg markets) very disappointing performance

Post by Uncorrelated »

nisiprius wrote: Sun Oct 18, 2020 6:00 pm
Uncorrelated wrote: Sun Oct 18, 2020 5:12 pm...Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average... This cannot be explained by rational home bias, political risk, or tax advantages...
Can 2% of that 2.5% possibly be explained by the historic fact that the real return of stocks from 1900-2016, CAGR, was

--4.3% annualized for the world ex-US
--6.4% for the US?

Of course, you can get almost any desired result by selecting the date range--which is why I'm reproducing their full chart and not just picking one number from it. And you can usually articulate a reason why the one you chose is the appropriate one. We can certainly argue about it, but wouldn't that be a legitimate source of "rational" home bias?

Source: Credit Suisse Investment Returns Yearbook for 2017. (Why 2017? Because that's the last year the no-cost edition included the ex-US numbers).

https://imgur.com/nuKCMXs.png

https://imgur.com/sZERF36.png
I don't think so. Ken French determined the difference in expected return by calculating under which assumptions the chosen asset allocation was considered optimal (under an assumed CRRA utility function). When surveyed, the average American stated that they expected the dow to outperform the Nikkei by 8.6% (yikes!), and the average japanese expected the dow to outperform the Nikkei by 1.8%. You heard that right, the average Japanese investor believes that the Dow will outperform the Nikkei, but they still hold asset allocations that can only be rationalized if the exact opposite is true :oops:

Simply put I believe the degree of home bias is the result of bias upon bias, I don't think we can derive the actual causes.
User avatar
Uncorrelated
Posts: 1019
Joined: Sun Oct 13, 2019 3:16 pm

Re: VWO (emerg markets) very disappointing performance

Post by Uncorrelated »

000 wrote: Sun Oct 18, 2020 6:22 pm
Uncorrelated wrote: Sun Oct 18, 2020 6:13 pm The US has never outperformed expectations according to any statistically valid expectation. There simply isn't enough data to conclude that. If the US has an expected return of 6.0 for 100 years and the expected return then drops to 4.0 for the 100 years thereafter, it's unlikely that we will be able to conclude that the expected return was different between the two time periods. The measurement error introduced by volatility is just that large.
This is just absurd. Please restudy European and US history, 1600 - present.
Your statement that the US has outperformed expectations repeatedly requires that:
We computed some estimate of future return in the past.
Following this estimate, we gather sufficient amounts of data that we can disprove that the previous estimate was correct.

For reference, if we try to estimate the ERP over the last 100 years we find a 95% confidence interval 2% and 10%. How much data do you think we will need to disprove that that estimate was correct? This is simply statistically improbably. Based on the data I have access to, I can't even conclude that the expected return of any country is different from another.
User avatar
asset_chaos
Posts: 1828
Joined: Tue Feb 27, 2007 6:13 pm
Location: Melbourne

Re: VWO (emerg markets) very disappointing performance

Post by asset_chaos »

If you have a diversified stock portfolio, then some part of it will always be disappointing. It's a fact of investing life that you'll have to get used to. As I recall, emerging markets were the bright spot around 2000-2008 when US stocks after the tech crash were the disappointing part of a diversified stock portfolio. Yes, one can see it in this MSCI chart that contrasts emerging markets and developed markets (MSCI world) for past 10 years and since 2000. 10 years, developed stocks + 6% a year on emerging; since 2000, emerging +3% a year on developed.

The potential emotional drag of seeing sector volatility is one of the reasons I prefer the total world stock index fund: the "moving parts" of the portfolio are hidden. What we can't see easily, we worry less about. It's the same if you only consider the US total stock index fund. The investor in US total stock doesn't usually notice the sector that's been disappointing for several years, but there has most certainly been a 13 year laggard.

In fact a very quick google turns up an interesting US sector return chart for past 12 years, linked below (NB small table at bottom for 12 year annualized returns). I'd say several of these sectors' returns are disappointing---even compared to emerging markets, which had, I think, at least a positive return over this time frame. Much better in my opinion to stay broadly diversified. And if slicing the broad market into pieces gives you worries, pains, disappointment, maybe consider hiding from view the moving parts and using a total world type approach.

Image
Regards, | | Guy
columbia
Posts: 2923
Joined: Tue Aug 27, 2013 5:30 am

Re: VWO (emerg markets) very disappointing performance

Post by columbia »

It seems odd to invest in EM, because it's a perceived diversifier and then fret over it not providing similar returns as other assets. That's what you were looking for, right?

If one is looking to diversify away from equities, you should put that money in something other than...equities.
000
Posts: 2667
Joined: Thu Jul 23, 2020 12:04 am

Re: VWO (emerg markets) very disappointing performance

Post by 000 »

Uncorrelated wrote: Sun Oct 18, 2020 6:37 pm
000 wrote: Sun Oct 18, 2020 6:22 pm
Uncorrelated wrote: Sun Oct 18, 2020 6:13 pm The US has never outperformed expectations according to any statistically valid expectation. There simply isn't enough data to conclude that. If the US has an expected return of 6.0 for 100 years and the expected return then drops to 4.0 for the 100 years thereafter, it's unlikely that we will be able to conclude that the expected return was different between the two time periods. The measurement error introduced by volatility is just that large.
This is just absurd. Please restudy European and US history, 1600 - present.
Your statement that the US has outperformed expectations repeatedly requires that:
We computed some estimate of future return in the past.
Following this estimate, we gather sufficient amounts of data that we can disprove that the previous estimate was correct.

For reference, if we try to estimate the ERP over the last 100 years we find a 95% confidence interval 2% and 10%. How much data do you think we will need to disprove that that estimate was correct? This is simply statistically improbably. Based on the data I have access to, I can't even conclude that the expected return of any country is different from another.
There is a difference between knowledge and wisdom.
Last edited by 000 on Sun Oct 18, 2020 7:52 pm, edited 1 time in total.
absolute zero
Posts: 477
Joined: Thu Dec 29, 2016 4:59 pm

Re: VWO (emerg markets) very disappointing performance

Post by absolute zero »

I really cannot imagine being disappointed with the returns of something that constituted 3% of my portfolio. I also cannot imagine holding any fund at a target weight of only 3% of my portfolio.
langlands
Posts: 553
Joined: Wed Apr 03, 2019 10:05 pm

Re: VWO (emerg markets) very disappointing performance

Post by langlands »

Uncorrelated wrote: Sun Oct 18, 2020 6:25 pm
nisiprius wrote: Sun Oct 18, 2020 6:00 pm
Uncorrelated wrote: Sun Oct 18, 2020 5:12 pm...Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average... This cannot be explained by rational home bias, political risk, or tax advantages...
Can 2% of that 2.5% possibly be explained by the historic fact that the real return of stocks from 1900-2016, CAGR, was

--4.3% annualized for the world ex-US
--6.4% for the US?

Of course, you can get almost any desired result by selecting the date range--which is why I'm reproducing their full chart and not just picking one number from it. And you can usually articulate a reason why the one you chose is the appropriate one. We can certainly argue about it, but wouldn't that be a legitimate source of "rational" home bias?

Source: Credit Suisse Investment Returns Yearbook for 2017. (Why 2017? Because that's the last year the no-cost edition included the ex-US numbers).

https://imgur.com/nuKCMXs.png

https://imgur.com/sZERF36.png
I don't think so. Ken French determined the difference in expected return by calculating under which assumptions the chosen asset allocation was considered optimal (under an assumed CRRA utility function). When surveyed, the average American stated that they expected the dow to outperform the Nikkei by 8.6% (yikes!), and the average japanese expected the dow to outperform the Nikkei by 1.8%. You heard that right, the average Japanese investor believes that the Dow will outperform the Nikkei, but they still hold asset allocations that can only be rationalized if the exact opposite is true :oops:

Simply put I believe the degree of home bias is the result of bias upon bias, I don't think we can derive the actual causes.
If the degree of home bias for no rational reason is so large, how can we be confident that capital is being allocated efficiently across borders? In other words, it seems that the EMH in regards to country level allocation has a weak theoretical basis. The EMH only works if there is a strong mechanism for arbitrage. You need active managers to do the work. The large number of stock picking active managers ensures that the relative value of stocks within a country is quite efficiently priced. I'm highly doubtful that the amount of AUM by the relatively small number of macro funds out there (Bridgwater, Soros, etc.) is capable of ensuring that the markets are efficiently priced between large entities like Europe, Asia, and the US. Say the US stock market is underpriced. You really think a group of hedge funds is going to put on a long US, short Europe trade that is large enough to normalize valuations?

It may be that the noise is too great to determine purely statistically from past returns of the last 50-100 years whether one country has consistently outperformed another. But everyone (especially these days) has a view on where the world is heading. Data like past financial metrics or past returns are important to consider, but they aren't the only things that can be used to predict future returns. Politics, culture, technology, etc. obviously have a large impact on macro trends, and I don't think it's preposterous for people to think they have informed views on these topics (of course it's a bit awkward since this forum precisely prohibits discussion of these topics, which IMO is highly relevant to international allocation). If someone thinks that US, or Europe, or Asia (or South America or Africa) is going to outperform, I find the automatic Boglehead response of "it's priced in" highly unconvincing. It may be that it's very hard to predict, but there is little reason to think the "financial experts" have priced everything perfectly.
User avatar
Uncorrelated
Posts: 1019
Joined: Sun Oct 13, 2019 3:16 pm

Re: VWO (emerg markets) very disappointing performance

Post by Uncorrelated »

langlands wrote: Mon Oct 19, 2020 1:36 am
Uncorrelated wrote: Sun Oct 18, 2020 6:25 pm
nisiprius wrote: Sun Oct 18, 2020 6:00 pm
Uncorrelated wrote: Sun Oct 18, 2020 5:12 pm...Ken French in a 2007 paper, Investor Diversification and International Equity Markets has investigated home bias. He concluded that US investors believe that domestic market will outperform by 2.5% on average... This cannot be explained by rational home bias, political risk, or tax advantages...
Can 2% of that 2.5% possibly be explained by the historic fact that the real return of stocks from 1900-2016, CAGR, was

--4.3% annualized for the world ex-US
--6.4% for the US?

Of course, you can get almost any desired result by selecting the date range--which is why I'm reproducing their full chart and not just picking one number from it. And you can usually articulate a reason why the one you chose is the appropriate one. We can certainly argue about it, but wouldn't that be a legitimate source of "rational" home bias?

Source: Credit Suisse Investment Returns Yearbook for 2017. (Why 2017? Because that's the last year the no-cost edition included the ex-US numbers).

https://imgur.com/nuKCMXs.png

https://imgur.com/sZERF36.png
I don't think so. Ken French determined the difference in expected return by calculating under which assumptions the chosen asset allocation was considered optimal (under an assumed CRRA utility function). When surveyed, the average American stated that they expected the dow to outperform the Nikkei by 8.6% (yikes!), and the average japanese expected the dow to outperform the Nikkei by 1.8%. You heard that right, the average Japanese investor believes that the Dow will outperform the Nikkei, but they still hold asset allocations that can only be rationalized if the exact opposite is true :oops:

Simply put I believe the degree of home bias is the result of bias upon bias, I don't think we can derive the actual causes.
If the degree of home bias for no rational reason is so large, how can we be confident that capital is being allocated efficiently across borders? In other words, it seems that the EMH in regards to country level allocation has a weak theoretical basis. The EMH only works if there is a strong mechanism for arbitrage. You need active managers to do the work. The large number of stock picking active managers ensures that the relative value of stocks within a country is quite efficiently priced. I'm highly doubtful that the amount of AUM by the relatively small number of macro funds out there (Bridgwater, Soros, etc.) is capable of ensuring that the markets are efficiently priced between large entities like Europe, Asia, and the US. Say the US stock market is underpriced. You really think a group of hedge funds is going to put on a long US, short Europe trade that is large enough to normalize valuations?

It may be that the noise is too great to determine purely statistically from past returns of the last 50-100 years whether one country has consistently outperformed another. But everyone (especially these days) has a view on where the world is heading. Data like past financial metrics or past returns are important to consider, but they aren't the only things that can be used to predict future returns. Politics, culture, technology, etc. obviously have a large impact on macro trends, and I don't think it's preposterous for people to think they have informed views on these topics (of course it's a bit awkward since this forum precisely prohibits discussion of these topics, which IMO is highly relevant to international allocation). If someone thinks that US, or Europe, or Asia (or South America or Africa) is going to outperform, I find the automatic Boglehead response of "it's priced in" highly unconvincing. It may be that it's very hard to predict, but there is little reason to think the "financial experts" have priced everything perfectly.
The data is from 1990, I suspect it's more than just slightly outdated.

But you're right, in general, we cannot be confident that capital is allocated efficiently across borders. Valuations might depend heavily on the degree of home bias. Or they might not. I don't necessarily expect large traders to perform a long US, short EU trades. But I expect that Japanese active managers take valuations into account when they are discussing stock allocations in either the US or EU. Of course, we all know that those managers tend not to outperform passive managers.

Knowing that capital is allocated inefficiently is not sufficient to support active management. We also have to be confident that we can select a better allocation than market cap weight. Given the large error margins involved with estimating expected returns and the guaranteed loss of improper diversification, country picking doesn't look particularly attractive.
xerxes101
Posts: 357
Joined: Sat Oct 14, 2017 11:25 am

Re: VWO (emerg markets) very disappointing performance

Post by xerxes101 »

nisiprius wrote: Sun Oct 18, 2020 8:04 am
xerxes101 wrote: Sun Oct 18, 2020 5:04 am At roughly about 5% allocation, I don't view VWO's role in the portfolio strictly as a performance booster right now, I view it as a means for diversification and holding an uncorrelated asset class.
5% isn't going to move the needle much on diversification or correlation, either.

And "uncorrelated" means ρ=0.0, while the correlation between the Vanguard Total [US] Stock Market Fund, VTSMX, and the Emerging Markets Index Fund, VEIEX, has been 0.77. That's not "uncorrelated." In a statistics class or a medical study that would be "highly correlated." It's certainly not a powerfully low correlation. And low correlation always has to be balanced against the main point, risk-adjusted return.

Simply because something does not have 1.00 correlation with a portfolio does not automatically mean it will improve a portfolio. What the low correlation thing means is that a blend of several decent investments may synergize if they have low correlation, but they need to be decent investments on their own. You shouldn't add something just for low correlation unless you believe it will be roughly on a par with your other holdings in risk-adjusted return.

That's not to say emerging markets won't be a decent investment, just that you shouldn't hold something for "low correlation" unless you also think it is a good investment in its own right.

Of course, a 5% allocation can't hurt much, either.
Nisiprius, Thank you for taking the time to explain your point. I do appreciate what you are saying and I think I understand it. While by strict definition of "correlation" VWO is an asset class which is correlated to VOO say by 0.77, however, I believe my bias is that since VWO's return has been so lousy over the past few years relative to VOO that it is likely for it to revert back to the mean and perform well or better at some point. So I was using the word "uncorrelated" in that sense of the word. Do you see that thought process as being flawed?

Also, I heard that the person who developed Portfolio Visualizer is a member or somehow associated with this board. Who is that person, do you know? ...'cause I want to personally thank him/her for all the work. :beer
asif408
Posts: 2182
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: VWO (emerg markets) very disappointing performance

Post by asif408 »

OP,

I have 50% of my portfolio in emerging markets value. If anyone should be disappointed in the last decade of EM performance, it should be me, not you. But for some irrational reason, I've kept adding to my EM allocation. Yet you are griping about your 3% allocation. I think you have two options:

1) Eliminate the position since it's only 3% of your portfolio
2) Triple or quadruple your current allocation so it makes a meaningful difference and stick with it

Let me know how you felt looking back in May 2011 when from the period of 1999-2011 EM beat US stocks by 11% CAGR: https://www.portfoliovisualizer.com/bac ... ion3_3=100 Pretty pitiful performance for US stocks, if you ask me. I would have been better off with 100% bonds than US stocks.

They are still playing catch up from that atrocious showing. Sadly, they've still underperformed since 1999: https://www.portfoliovisualizer.com/bac ... ion2_2=100. Wow, 21 years of underperformance compared to EM stocks! Where is the outrage from the US investors???? I thought 13 years was a long time, but if US stocks can underperform emerging markets stocks for 21 years, why would I expect anything different the next 21 years?
theorist
Posts: 686
Joined: Sat Sep 28, 2019 11:39 am

Re: VWO (emerg markets) very disappointing performance

Post by theorist »

asif408 wrote: Mon Oct 19, 2020 7:45 am OP,

I have 50% of my portfolio in emerging markets value. If anyone should be disappointed in the last decade of EM performance, it should be me, not you. But for some irrational reason, I've kept adding to my EM allocation. Yet you are griping about your 3% allocation. I think you have two options:

1) Eliminate the position since it's only 3% of your portfolio
2) Triple or quadruple your current allocation so it makes a meaningful difference and stick with it

Let me know how you felt looking back in May 2011 when from the period of 1999-2011 EM beat US stocks by 11% CAGR: https://www.portfoliovisualizer.com/bac ... ion3_3=100 Pretty pitiful performance for US stocks, if you ask me. I would have been better off with 100% bonds than US stocks.

They are still playing catch up from that atrocious showing. Sadly, they've still underperformed since 1999: https://www.portfoliovisualizer.com/bac ... ion2_2=100. Wow, 21 years of underperformance compared to EM stocks! Where is the outrage from the US investors???? I thought 13 years was a long time, but if US stocks can underperform emerging markets stocks for 21 years, why would I expect anything different the next 21 years?
Interesting!

As someone with a focus on emerging markets funds, do you have a strong feeling about Vanguard’s emerging markets index fund one way or the other? I’ve heard some complaints about its very large weight of Chinese holdings. (Though I have no particular reason to be more skeptical of weighing that market by market cap of available stocks than I do for any other market.) Some folks — even in previous threads on bogleheads, I believe — seem to think that other weightings by nation, or even active choice, works better in emerging markets.
asif408
Posts: 2182
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: VWO (emerg markets) very disappointing performance

Post by asif408 »

theorist wrote: Mon Oct 19, 2020 9:00 am Interesting!

As someone with a focus on emerging markets funds, do you have a strong feeling about Vanguard’s emerging markets index fund one way or the other? I’ve heard some complaints about its very large weight of Chinese holdings. (Though I have no particular reason to be more skeptical of weighing that market by market cap of available stocks than I do for any other market.) Some folks — even in previous threads on bogleheads, I believe — seem to think that other weightings by nation, or even active choice, works better in emerging markets.
Not really, its perfectly fine. Of course if you're bothered by the amount of China holdings there are plenty of choices out there that reduce or exclude China. And you could own individual country ETFs if you want your own mix.

I'm pretty much all in EM value, so it has a slightly lower weight in China, but I don't go out of my way to avoid China. Even if you have half your portfolio in an EM index fund (which is considered pretty extreme and most people don't have nearly that much) that means you have about 25% of your portfolio in China and 75% elsewhere.
Day9
Posts: 986
Joined: Mon Jun 11, 2012 6:22 pm

Re: VWO (emerg markets) very disappointing performance

Post by Day9 »

asif408 wrote: Mon Oct 19, 2020 7:45 am OP,

I have 50% of my portfolio in emerging markets value. If anyone should be disappointed in the last decade of EM performance, it should be me, not you. But for some irrational reason, I've kept adding to my EM allocation. Yet you are griping about your 3% allocation. I think you have two options: ...
Wow, 20% of my STOCK portfolio is in Emerging Markets Value (DFEVX) and I was thinking of making the same kind of post as you, but you take the cake. I've been rebalancing and staying the course as well. You say it is an "irrational" reason but I believe my overweight allocation to be quite rational and I suspect you do too and are being humble. Good luck to us both. :beer
I'm just a fan of the person I got my user name from
asif408
Posts: 2182
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: VWO (emerg markets) very disappointing performance

Post by asif408 »

Day9 wrote: Mon Oct 19, 2020 9:45 am You say it is an "irrational" reason but I believe my overweight allocation to be quite rational and I suspect you do too and are being humble. Good luck to us both. :beer
Yes, my facetiousness doesn't come across well in my posts. :sharebeer
Post Reply