VXUS alternatives?

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adave
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VXUS alternatives?

Post by adave »

VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
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life in slices
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Re: VXUS alternatives?

Post by life in slices »

I guess you have to decide if you want emerging markets, value, etc as an alternative

I am about 50/50 VEA (developed markets) and VXUS - mostly from some rebalancing
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Re: VXUS alternatives?

Post by Wanderingwheelz »

If you’ve never heard of a company it makes you not want to own it? Or is it that you only want exposure to most mega of mega cap international companies?

Do you own VTI or VOO?
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Re: VXUS alternatives?

Post by toddthebod »

adave wrote: Mon Apr 01, 2024 12:05 pm VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
You might be interested in developed markets only: VEA at Vanguard.

DFAX holds >9,500 companies across the same markets. I don't see how this solves your issue.
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Re: VXUS alternatives?

Post by ivgrivchuck »

VXUS + Some individual shares seems like the way to go
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHP
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Re: VXUS alternatives?

Post by 02nz »

adave wrote: Mon Apr 01, 2024 12:05 pm The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.
What makes you think you know more about the worth of any of those companies' stocks - whether well known or unknwon to you - than the market does? Do you have any criteria for "attractive" besides "they're famous"?
Last edited by 02nz on Mon Apr 01, 2024 12:29 pm, edited 2 times in total.
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

Consider VEU (Vanguard FTSE All-World ex-US ETF) instead of VXUS. It's cheaper (ER=0.07%) than VXUS and covers the same countries. The difference is that VEU doesn't include small-caps.
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Re: VXUS alternatives?

Post by adave »

VEU might be what I am after. Thanks.
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Re: VXUS alternatives?

Post by TimeIsYourFriend »

adave wrote: Mon Apr 01, 2024 12:05 pm VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
Most of those thousands of companies have little effect on returns. Vanguard VTI total US stock has about 3700 companies, Vanguard VOO has about 500 companies. The difference in return between these is about 0.1% since inception with similar other stats. Unless you think you know what a "high quality company" is and that differs from what the market considers a high quality company, then you need to let us know. Maybe that is international tech which you think the market is undervaluing (which would be odd position) or maybe you want only dividend growers or something. let us know.

Investing only in companies that you recognize most likely underperforms the average market in the long term. This is the known good company is a good investment fallacy.
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Re: VXUS alternatives?

Post by Whakamole »

DIHP (DFA High Profitability) is one I've been looking at, as it looks like a better holding in taxable.
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Re: VXUS alternatives?

Post by Lawyered_ »

You may want to to consider Avantis International Equity ETF (AVDE), which is a mild value tilt or Avantis All International Markets Value ETF (AVN) which is a big value tilt as well.
Last edited by Lawyered_ on Mon Apr 01, 2024 12:41 pm, edited 1 time in total.
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Re: VXUS alternatives?

Post by happyisland »

02nz wrote: Mon Apr 01, 2024 12:26 pm
adave wrote: Mon Apr 01, 2024 12:05 pm The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.
What makes you think you know more about the worth of any of those companies' stocks - whether well known or unknwon to you - than the market does? Do you have any criteria for "attractive" besides "they're famous"?
Good question. OP has been a member since 2007 but doesn't seem to know, or agree with, one of the pillars of bogleheadism...
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Re: VXUS alternatives?

Post by adave »

I think I can live without international small caps and still be considered a Boglehead?
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Re: VXUS alternatives?

Post by adave »

Lawyered_ wrote: Mon Apr 01, 2024 12:38 pm You may want to to consider Avantis International Equity ETF (AVDE) as well.
Expensive imo, not sure it justifies the extra expense. Does Avantis really have any special sauce?
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Re: VXUS alternatives?

Post by Lawyered_ »

adave wrote: Mon Apr 01, 2024 12:41 pm
Lawyered_ wrote: Mon Apr 01, 2024 12:38 pm You may want to to consider Avantis International Equity ETF (AVDE) as well.
Expensive imo, not sure it justifies the extra expense. Does Avantis really have any special sauce?
Yes, it is more expensive. Only you can decide if the screening and methodology that Avantis applies is worth the cost to you. I only mention Avantis options as your post seemed to indicate that you wanted to screen out some "trash" stocks. Avantis tries to do just that.
Last edited by Lawyered_ on Mon Apr 01, 2024 12:45 pm, edited 1 time in total.
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Re: VXUS alternatives?

Post by 02nz »

adave wrote: Mon Apr 01, 2024 12:32 pm VEU might be what I am after. Thanks.
The difference between VEU and VXUS is minuscule, basically zero. It certainly doesn't provide any evidence for this "diworsification" bunk.
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Re: VXUS alternatives?

Post by nisiprius »

It seems to me that you want an actively managed fund with a curated selection of companies and stocks. I don't invest in actively managed funds.

The following remarks are just saying two funds exist and you might want to include them in your search. I don't think your concerns about "diworsification" are well-founded. But it's a point of view and some people hold it. I mean, either you're an indexer or a stock picker. I'm an indexer. If you want to "know" all the stocks you invest in, you might not be a mutual fund or ETF investor at all.

Here are the names of two funds. I don't recommend these two funds, I don't use them myself, I am just naming two funds that you might want to include in a list of funds to consider.

Before retirement, my employer offered a Fidelity-managed 401(k) in which the only international stock offering was FDIVX, the Fidelity Diversified International Fund. It holds only 145 stocks. It's a biggish fund holding $10 billion in assets, 90% of its portfolio value is is in large-caps, 43% specifically in large-cap growth. Inception was in 1991 so it's been around for over thirty years. It has in fact outperformed the Vanguard Total International Stock Index Fund.

If you go to Vanguard's interactive lists of mutual funds and ETFs, you will find that Vanguard does not have any actively managed international stock ETFs. It has 19 actively managed international stock mutual funds, which hopefully will come up in this link:

Filtered mutual fund list

The Vanguard International Explorer Fund, VINEX, had inception in 1996, has $1.4 billion in assets, hold 434 stocks with a median market cap of $3 billion, and since inception has outperformed both Fidelity Diversified International and Vanguard Total International Index.
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Re: VXUS alternatives?

Post by Beensabu »

adave wrote: Mon Apr 01, 2024 12:41 pm Expensive imo, not sure it justifies the extra expense.
IQLT (iShares MSCI Intl Quality Factor ETF) is similarly expensive (0.30% ER) but has exactly the kinds of international holdings (292 of them) that you seem to want.
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

toddthebod wrote: Mon Apr 01, 2024 12:18 pm...
You might be interested in developed markets only: VEA at Vanguard.
...
SPDW (SPDR Portfolio Developed World ex-US ETF) covers the same markets as VEA but at a lower cost (ER=0.03%). However, Taiwan isn't considered a developed market, so SPDW/VEA/SCHF would exclude companies like TSMC and Hon Hai Precision (AKA Foxconn).
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Re: VXUS alternatives?

Post by toddthebod »

adave wrote: Mon Apr 01, 2024 12:32 pm VEU might be what I am after. Thanks.
The difference between VEU and VXUS is inconsequential.
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Re: VXUS alternatives?

Post by Da5id »

adave wrote: Mon Apr 01, 2024 12:05 pm VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
I feel like a different way to say this is:

The cool companies I know are mispriced by the market. They are prospectively better buys than the other companies I don't know because XYZ (markets aren't efficient, and people are undervaluing the cool well known companies?????)

It may be true, but dunno why one would need to bet on it. You get more of the big companies in a cap weighted fund anyway. But if you know the companies which are superior investments why use a mutual fund rather than just buy single stocks?
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Re: VXUS alternatives?

Post by arcticpineapplecorp. »

toddthebod wrote: Mon Apr 01, 2024 1:05 pm
adave wrote: Mon Apr 01, 2024 12:32 pm VEU might be what I am after. Thanks.
The difference between VEU and VXUS is inconsequential.
true if you look at veu vs vxus (which only goes back to 2012). There's actually two lines there:

Image

if you use vgtsx instead of vxus which goes back further before vxus started in 2012 veu did outperform vxus:

Image

but it could go the other way, too. The past is not prologue.

source: https://www.portfoliovisualizer.com/bac ... l72EOsOBSl
Last edited by arcticpineapplecorp. on Mon Apr 01, 2024 1:45 pm, edited 1 time in total.
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Re: VXUS alternatives?

Post by adave »

My perspective is not that I know better than the market. However, having lived in several developing countries in my life, I am not sure I would apply the same level of trust to international markets as I do domestic. I do believe the international markets, especially smaller companies, may be more inefficient relative to US counterparts. I have no evidence for this besides lived experience.

Perhaps there is a role for mild active management in international? I will have a look at the Avantis fund closely.
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Re: VXUS alternatives?

Post by arcticpineapplecorp. »

adave wrote: Mon Apr 01, 2024 1:45 pm My perspective is not that I know better than the market. However, having lived in several developing countries in my life, I am not sure I would apply the same level of trust to international markets as I do domestic. I do believe the international markets, especially smaller companies, may be more inefficient relative to US counterparts.
But then those smaller markets should be priced cheaper (i.e., have higher expected returns) to compensate for the added inefficiency and lack of trust if others believe the same as you do. Of course, that too is already priced into the market. You can't know anything the market has already figured out. There are additional currency risks, which can affect those higher expected returns.
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Re: VXUS alternatives?

Post by beardsicles »

nisiprius wrote: Mon Apr 01, 2024 12:47 pm It seems to me that you want an actively managed fund with a curated selection of companies and stocks. I don't invest in actively managed funds.

The following remarks are just saying two funds exist and you might want to include them in your search. I don't think your concerns about "diworsification" are well-founded. But it's a point of view and some people hold it. I mean, either you're an indexer or a stock picker. I'm an indexer. If you want to "know" all the stocks you invest in, you might not be a mutual fund or ETF investor at all.

Here are the names of two funds. I don't recommend these two funds, I don't use them myself, I am just naming two funds that you might want to include in a list of funds to consider.

Before retirement, my employer offered a Fidelity-managed 401(k) in which the only international stock offering was FDIVX, the Fidelity Diversified International Fund. It holds only 145 stocks. It's a biggish fund holding $10 billion in assets, 90% of its portfolio value is is in large-caps, 43% specifically in large-cap growth. Inception was in 1991 so it's been around for over thirty years. It has in fact outperformed the Vanguard Total International Stock Index Fund.

If you go to Vanguard's interactive lists of mutual funds and ETFs, you will find that Vanguard does not have any actively managed international stock ETFs. It has 19 actively managed international stock mutual funds, which hopefully will come up in this link:

Filtered mutual fund list

The Vanguard International Explorer Fund, VINEX, had inception in 1996, has $1.4 billion in assets, hold 434 stocks with a median market cap of $3 billion, and since inception has outperformed both Fidelity Diversified International and Vanguard Total International Index.
It’s actually pretty interesting how consistently FDIVX has outperformed VTIAX. A little more volatility but curiously it’s not just oil and gas. Don’t have time to dig in right now but my curiosity is piqued.

Edit: said I didn’t have time but was still curious. Per portfoliovisualizer, the difference can’t just be Intl Developed vs Global Ex US, that’s only a 20 basis point difference in CAGR since 1986.
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Re: VXUS alternatives?

Post by Da5id »

adave wrote: Mon Apr 01, 2024 1:45 pm My perspective is not that I know better than the market. However, having lived in several developing countries in my life, I am not sure I would apply the same level of trust to international markets as I do domestic. I do believe the international markets, especially smaller companies, may be more inefficient relative to US counterparts. I have no evidence for this besides lived experience.

Perhaps there is a role for mild active management in international? I will have a look at the Avantis fund closely.
Clearly you should only invest in things you believe in.

SPIVA data shows that for international funds as a whole, over 1/3/5/10/15/20 years ending in Dec 2023 68.07%/69.98%/77.97%/87.80%/87.05%/93.38% of funds underperformed their passive benchmark. It doesn't give me great faith in the ability of active management to after expenses beat the index. Picking the right fund is probably comparably hard to picking the right companies. YMMV, but I tend to find SPIVA a pretty compelling argument against active management.

The report can be downloaded here: https://www.spglobal.com/spdji/en/docum ... load=true
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Re: VXUS alternatives?

Post by TimeIsYourFriend »

adave wrote: Mon Apr 01, 2024 1:45 pm My perspective is not that I know better than the market. However, having lived in several developing countries in my life, I am not sure I would apply the same level of trust to international markets as I do domestic. I do believe the international markets, especially smaller companies, may be more inefficient relative to US counterparts. I have no evidence for this besides lived experience.

Perhaps there is a role for mild active management in international? I will have a look at the Avantis fund closely.
Small companies make up 4% of VXUS. So if all the small international companies globally all went bankrupt at exactly the same time in some unprecedented event directed by a higher power, VXUS would be down 4% for the day.
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

TimeIsYourFriend wrote: Mon Apr 01, 2024 2:36 pm...
Small companies make up 4% of VXUS. So if all the small international companies globally all went bankrupt at exactly the same time in some unprecedented event directed by a higher power, VXUS would be down 4% for the day.
So, explain again why one should pay extra for VXUS, relative to VEU, just to hold those thousands of little companies.
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Re: VXUS alternatives?

Post by Northern Flicker »

toddthebod wrote: Mon Apr 01, 2024 12:18 pm
adave wrote: Mon Apr 01, 2024 12:05 pm VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
You might be interested in developed markets only: VEA at Vanguard.
That would exclude the largest company in VXUS, TSMC.

When some other company moves into the top 10, do you want it added to your portfolio then, after it appreciated into the top 10, or before you have heard of it, and its market cap and cost is lower?
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Re: VXUS alternatives?

Post by TimeIsYourFriend »

Cocoa Beach Bum wrote: Mon Apr 01, 2024 2:49 pm
TimeIsYourFriend wrote: Mon Apr 01, 2024 2:36 pm...
Small companies make up 4% of VXUS. So if all the small international companies globally all went bankrupt at exactly the same time in some unprecedented event directed by a higher power, VXUS would be down 4% for the day.
So, explain again why one should pay extra for VXUS, relative to VEU, just to hold those thousands of little companies.
I don't think that. VEU is fine over VXUS. Some people like to get literal with "holding the haystack". Not that VXUS actually holds every company but I guess that it is a step closer to that.
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Re: VXUS alternatives?

Post by Northern Flicker »

VEU tracks an index that excludes small caps, it has a higher allocation to large and midcaps than VXUS.
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Re: VXUS alternatives?

Post by Northern Flicker »

Cocoa Beach Bum wrote: Mon Apr 01, 2024 2:49 pm
TimeIsYourFriend wrote: Mon Apr 01, 2024 2:36 pm...
Small companies make up 4% of VXUS. So if all the small international companies globally all went bankrupt at exactly the same time in some unprecedented event directed by a higher power, VXUS would be down 4% for the day.
So, explain again why one should pay extra for VXUS, relative to VEU, just to hold those thousands of little companies.
VXUS had the same ER has VEU until recently. VXUS is 1 bp higher for its projected cost. It nay even come in at the same level. Hard to know how it will change in the future. Either fund is fine.
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Re: VXUS alternatives?

Post by Northern Flicker »

Da5id wrote: SPIVA data shows that for international funds as a whole, over 1/3/5/10/15/20 years ending in Dec 2023 68.07%/69.98%/77.97%/87.80%/87.05%/93.38% of funds underperformed their passive benchmark. It doesn't give me great faith in the ability of active management to after expenses beat the index.
I agree.

I will note that these results include funds with fairly high ERs. Controlling cost will improve the chances. A fund like VTRIX is actively managed with lower cost. The problem though is not being tax-efficient if held in a taxable account, and giving up the foreign tax credit in a tax-qualified account.

Generally, international transactions are pricier than US transactions for a fund based in the US. An active fund will do more trading, an additional barrier to overcome.

Putting all that together, I still prefer a market index fund for international stocks.
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Re: VXUS alternatives?

Post by Da5id »

Northern Flicker wrote: Mon Apr 01, 2024 3:20 pm
Da5id wrote: SPIVA data shows that for international funds as a whole, over 1/3/5/10/15/20 years ending in Dec 2023 68.07%/69.98%/77.97%/87.80%/87.05%/93.38% of funds underperformed their passive benchmark. It doesn't give me great faith in the ability of active management to after expenses beat the index.
I agree.

I will note that these results include funds with fairly high ERs. Controlling cost will improve the chances. A fund like VTRIX is actively managed with lower cost. The problem though is not being tax-efficient if held in a taxable account, and giving up the foreign tax credit in a tax-qualified account.

Generally, international transactions are pricier than US transactions for a fund based in the US. An active fund will do more trading, an additional barrier to overcome.

Putting all that together, I still prefer a market index fund for international stocks.
Yes, though there is also a survivorship bias at play to make the existing active funds look better. Only 36% of Int'l funds in the SPIVA survey made it to 20 years.
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Re: VXUS alternatives?

Post by oldcomputerguy »

An off-topic exchange was removed. Please keep replies centered on the OP's question (alternatives to VXUS for international exposure).
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Re: VXUS alternatives?

Post by muffins14 »

adave wrote: Mon Apr 01, 2024 12:05 pm VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
Do you feel the same way about the US companies that are not in the S&P 500?
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Re: VXUS alternatives?

Post by adave »

VEA excluding TSMC is a game changer. TSMC is probably one of the most important companies in the world. VXUS it is, I guess. Or perhaps I will take the Bogle route and just exclude international completely.
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

adave wrote: Mon Apr 01, 2024 4:24 pm VEA excluding TSMC is a game changer. TSMC is probably one of the most important companies in the world.
...
Since TSMC trades on the NYSE (ER=0.00%), it's easy to buy few shares to supplement SPDW/VEA/SCHF if you feel it's critical to own TSMC.
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Re: VXUS alternatives?

Post by mbouck »

I'll be a contrarian to the VXUS religion. I'm not a huge fan of EM but if you're going to go EM then I think it might make sense to go for Small Cap as these markets tend to be more dynamic than established/developed markets. I like EWX (SPDR S&P Emerging Markets Small Cap ETF) for this task but at 65bps most here will probably disregard it just because of that fact. For DM I like DIVI (Franklin Intl Core Div Tlt Idx ETF) at 9bps - this is a dividend-seeking index fund which, by design, will select for high dividend paying companies (which tend to be higher quality/more established - "stable" = good IMHO). For "total international", then, I'd do something like:

70% DIVI
30% EWX

This mix outperforms VXUS in total returns on both the upside and, critically, the downside.

Alternatively, If you want to hedge the foreign currency risk I'd suggest using DBEF (Xtrackers MSCI EAFE Hedged Equity ETF) @ 36bps. Its performance (both upside/downside) more than makes up for that markup IMHO:

70% DBEF
30% EWX
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Re: VXUS alternatives?

Post by Northern Flicker »

Cocoa Beach Bum wrote: Mon Apr 01, 2024 4:35 pm
adave wrote: Mon Apr 01, 2024 4:24 pm VEA excluding TSMC is a game changer. TSMC is probably one of the most important companies in the world.
...
Since TSMC trades on the NYSE (ER=0.00%), it's easy to buy few shares to supplement SPDW/VEA/SCHF if you feel it's critical to own TSMC.
I have considered holding VEA + EWT (Taiwanese equities) at times. It could improve tax efficiency by moving the 0% QDI stocks in EWT to a tax-qualified account. But I don't think the minimal value of that is worth the complexity of the separation across accounts.

I use VXUS because I like having access to the share conversion process from VTIAX as an alternative to purchasing as a brokerage transaction. But generally, IXUS has been more tax-efficient than VXUS.
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adave
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Re: VXUS alternatives?

Post by adave »

VWO is interesting, includes India, China and Taiwan. TSMC is the largest holding.
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Re: VXUS alternatives?

Post by z3r0c00l »

adave wrote: Mon Apr 01, 2024 12:05 pm VXUS is cheap (0.08 er) with PE ratio of 14 currently. The thing is, the top holdings are very attractive companies such as TSMC, ASML, Novo, LVMH, Toyota etc. These are great companies I would like to hold in my portfolio for the long term. However, there are over 8000+ companies in this ETF, which diluted the high quality international companies imo. I almost feel this is an example for “diworsification” so to speak.

Curious if there are other Boglehead approved options for international exposure? I’d even tolerate a mildly more expensive product. DFAX perhaps?
The 8000+ probably includes the next TSMC, Novo Nordisk, Toyota...
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Cocoa Beach Bum
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

Northern Flicker wrote: Mon Apr 01, 2024 5:40 pm...
I have considered holding VEA + EWT (Taiwanese equities) at times. It could improve tax efficiency by moving the 0% QDI stocks in EWT to a tax-qualified account.
...
An interesting factoid is that it appears dividends from TSMC's US stock can be "Qualified" because it is readily traded in the US on an established securities market, despite Taiwan's tax treaty status. See https://www.irs.gov/irb/2003-50_IRB#NOT-2003-79
In addition, a foreign corporation not otherwise treated as a qualified foreign corporation is so treated with respect to any dividend it pays if the stock with respect to which it pays such dividend is readily tradable on an established securities market in the United States.
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Re: VXUS alternatives?

Post by JSPECO9 »

BKIE - BNY Mellon International Equity ETF

S&P 500-like international ETF. 0.04% ER, even cheaper than both VXUS & VEA.
Northern Flicker
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Re: VXUS alternatives?

Post by Northern Flicker »

adave wrote: Mon Apr 01, 2024 6:02 pm VWO is interesting, includes India, China and Taiwan. TSMC is the largest holding.
VXUS = 75% VEA + 25% VWO.

VWO is the EM component of VXUS.
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Re: VXUS alternatives?

Post by Northern Flicker »

Decisions DM only vs total int'l vs DM + EM should be made at the asset class level in an asset allocation, not by analyzing which sticks in each you think are good. Once you have the asset classes specified, decide on any tilts or whether you prefer to harvest market returns. It doesn't really make sense to evaluate market index funds by the extent to which they provide exposure to stocks you favor. If you want active management or a factor tilt, hold an active fund or a factor-tilted fund. The reason for holding a market index portfolio is to diversify away all factors other than the market factor and all stock-specific return (alpha).

VXUS, IXUS, VEA, IDEV, VWO, and IEMG are all market index funds for their specific markets.
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

Northern Flicker wrote: Mon Apr 01, 2024 7:13 pm...
VXUS = 75% VEA + 25% VWO.

VWO is the EM component of VXUS.
Not true. VWO is overweight China because it tracks the FTSE Emerging Markets All Cap China A Inclusion Index.
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Re: VXUS alternatives?

Post by Northern Flicker »

China A shares ultimately were added to VXUS as well.
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Re: VXUS alternatives?

Post by Cocoa Beach Bum »

Northern Flicker wrote: Mon Apr 01, 2024 8:15 pm China A shares ultimately were added to VXUS as well.
You're probably right but I wonder why VWO holds ~250 more Chinese companies than VXUS.
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Re: VXUS alternatives?

Post by Northern Flicker »

Cocoa Beach Bum wrote: Mon Apr 01, 2024 8:54 pm
Northern Flicker wrote: Mon Apr 01, 2024 8:15 pm China A shares ultimately were added to VXUS as well.
You're probably right but I wonder why VWO holds ~250 more Chinese companies than VXUS.
VXUS holds 8566 stocks to track an index of 8308 stocks. That's 258 stocks not in the index. VWO holds 5775 stocks to track an index of 4598 stocks. That's 1177 stocks not in the index. Many (if not all) of those in either fund are illiquid stocks that left the index. I'd guess that the 250 Chinese stocks in VWO that are not in VXUS can be accounted for as part of the above.

There are many more China A share stocks than 250.
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