Differences among Vanguard International funds?

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livesoft
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Differences among Vanguard International funds?

Post by livesoft »

WARNING: Tbe graphic is out-of-date and needs to be updated. Check the prospectus at vanguard.com for more information.

A very frequently asked question on the forum is:
What is the difference between Vanguard International Fund A and Fund B?

VTIAX and VFWAX?
VFWAX and VFSVX?
VTMGX and VTIAX?
VTMGX and VFWAX?
VFWIX and VFSVX?
VXUS and VEU?
VEU and VEA?
VEU and VSS?

The differences relate to MARKET CAP and GEOGRAPHY. One can also say differences are DEVELOPED and DEVELOPING/EMERGING.

Another frequently asked question is:
How does one approximate Total International Index fund from these funds?

Guess what? Vanguard does not have all the necessary funds to always make things work. Vanguard is missing SCZ, EWC, and EWX.

I tried to make a graphic that shows this. No guarantee as to accuracy (but percentages change with market valuations anyways):

Image
Last edited by livesoft on Thu Jan 14, 2016 1:14 pm, edited 1 time in total.
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Laura
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Re: Differences among Vanguard International funds?

Post by Laura »

Very interesting chart. This should go on the wiki to approximate total intl stock market.

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Re: Differences among Vanguard International funds?

Post by boombaz »

livesoft,

Why would you use SCZ + EWX instead of just VSS? Is it because of the separate Canada fund?
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livesoft
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Re: Differences among Vanguard International funds?

Post by livesoft »

boombaz wrote:livesoft,

Why would you use SCZ + EWX instead of just VSS? Is it because of the separate Canada fund?
A few answers to that:
1. You wouldn't --- unless VSS did not exist at the time. VSS does contain Canadian stocks.
2. Maybe you tax-loss harvested VSS and need to buy some replacement shares in small-cap foreign funds.
3. Maybe VSS is not a free trade at your broker, but other ETFs are.

There are other ways to do all this, too. I left out Schwab and Fidelity funds. I also left out all other ETFs. I was simply giving myself a post that I could link for when the question gets asked again (and again (and again, …), …), ….).
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Re: Differences among Vanguard International funds?

Post by nisiprius »

Bravo! But you make it look much saner and rational, particularly with regard to VGTSX/VFWIX, than it really was historically. All the years that people were bellyaching because Total International had "no small-caps, and no Canada!"
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Re: Differences among Vanguard International funds?

Post by looking »

livesoft wrote:A very frequently asked question on the forum is:
What is the difference between Vanguard International Fund A and Fund B?

VTIAX and VFWAX?
VFWAX and VFSVX?
VTMGX and VTIAX?
VTMGX and VFWAX?
VFWIX and VFSVX?
VXUS and VEU?
VEU and VEA?
VEU and VSS?

The differences relate to MARKET CAP and GEOGRAPHY. One can also say differences are DEVELOPED and DEVELOPING/EMERGING.

Another frequently asked question is:
How does one approximate Total International Index fund from these funds?

Guess what? Vanguard does not have all the necessary funds to always make things work. Vanguard is missing SCZ, EWC, and EWX.

I tried to make a graphic that shows this. No guarantee as to accuracy (but percentages change with market valuations anyways):

Image

so which one is preffed choice
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livesoft
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Re: Differences among Vanguard International funds?

Post by livesoft »

Different people prefer different funds for different purposes. I use mostly 3 funds: VEU, VSS, and FSGDX. Those are my current preferences. I'm pretty sure others have different preferences.
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Re: Differences among Vanguard International funds?

Post by jay22 »

Livesoft, thanks for posting this. Right now, all my international allocation is in VG TISM and FSIVX. So, I have really small emerging market exposure. I would want to divide it into Developed & Emerging now. Do you think 50% developed and 50% emerging the right approach to take?
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Re: Differences among Vanguard International funds?

Post by livesoft »

jay22 wrote:Livesoft, thanks for posting this. Right now, all my international allocation is in VG TISM and FSIVX. So, I have really small emerging market exposure. I would want to divide it into Developed & Emerging now. Do you think 50% developed and 50% emerging the right approach to take?
No, I think the right approach is to use the market weight for emerging markets. Here is a post from earlier today which shows what Vanguard thinks is the market weight: http://www.bogleheads.org/forum/viewtop ... 7#p2492547 The chart above shows essentially the same weight for emerging markets, too.
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Re: Differences among Vanguard International funds?

Post by jay22 »

livesoft wrote:
jay22 wrote:Livesoft, thanks for posting this. Right now, all my international allocation is in VG TISM and FSIVX. So, I have really small emerging market exposure. I would want to divide it into Developed & Emerging now. Do you think 50% developed and 50% emerging the right approach to take?
No, I think the right approach is to use the market weight for emerging markets. Here is a post from earlier today which shows what Vanguard thinks is the market weight: http://www.bogleheads.org/forum/viewtop ... 7#p2492547 The chart above shows essentially the same weight for emerging markets, too.
So, approximately, 47% Europe, 23% Pacific, 8% Canada and 22% Emerging is the right market cap?

I only need to add Emerging markets to my international allocation of VGTSX and FSIVX, then.
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Re: Differences among Vanguard International funds?

Post by livesoft »

VGTSX already has the market weight of EM. FSIVX has no EM and no small-cap, so you have to do the math for that. Or exchange FSIVX into FSGDX.
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Re: Differences among Vanguard International funds?

Post by RaphaelHythloday »

Since this thread is being referred to again with all of the tax loss harvesting going on, I thought I would point out that small cap and Canadian exposures have been added to VEA/VTMGX. See https://personal.vanguard.com/us/insigh ... ent-062015
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Re: Differences among Vanguard International funds?

Post by JaySayms »

RaphaelHythloday wrote:Since this thread is being referred to again with all of the tax loss harvesting going on, I thought I would point out that small cap and Canadian exposures have been added to VEA/VTMGX. See https://personal.vanguard.com/us/insigh ... ent-062015

So VEA/VTMGX may be a better partner to VTIAX than VFWAX for tax loss harvesting purposes? Or are they too similar?
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Re: Differences among Vanguard International funds?

Post by livesoft »

I think the answer will always be: "No one can tell you the answer because no one knows."
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Re: Differences among Vanguard International funds?

Post by harikaried »

Thanks for the handy graphic. I'm sure people will appreciate it as they TLH among the various choices. Not included but not entirely wrong to exclude from the graphic is VTWSX / VT (total world) which is roughly 54% US and 46% International.

For us, we'll probably go VSS -> VEU -> VXUS -> VEA -> VT if necessary (using free trades at TD Ameritrade).
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Re: Differences among Vanguard International funds?

Post by indexfundfan »

harikaried wrote:Thanks for the handy graphic. I'm sure people will appreciate it as they TLH among the various choices. Not included but not entirely wrong to exclude from the graphic is VTWSX / VT (total world) which is roughly 54% US and 46% International.

For us, we'll probably go VSS -> VEU -> VXUS -> VEA -> VT if necessary (using free trades at TD Ameritrade).
Just be cautious with TD Ameritrade's short term trading fee.
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Re: Differences among Vanguard International funds?

Post by harikaried »

indexfundfan wrote:Just be cautious with TD Ameritrade's short term trading fee.
Ah yes. We recently moved to TD Ameritrade to get the cash bonus and free trade bonus. We explicitly don't want to use the commission-free ETF feature to avoid the associated short term trading fee. The 500 free trades does not have the 30-day roundtrip trading fee.
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Re: Differences among Vanguard International funds?

Post by livesoft »

The entire graphic needs to be updated with the changes made by Vanguard to their funds.
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Re: Differences among Vanguard International funds?

Post by abhikush »

livesoft wrote:The entire graphic needs to be updated with the changes made by Vanguard to their funds.
What changes were made. I can't find anything. Morning Star Instant X-Ray matches for VXUS and 90/10 VEU/VSS.

VXUS
Image

VEU/VSS
Image
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Re: Differences among Vanguard International funds?

Post by lack_ey »

abhikush wrote:
livesoft wrote:The entire graphic needs to be updated with the changes made by Vanguard to their funds.
What changes were made. I can't find anything. Morning Star Instant X-Ray matches for VXUS and 90/10 VEU/VSS.
Changes are in progress (M* data can be a bit stale) and don't apply to those funds.

The developed ex-NA fund is becoming developed ex-US (adding Canada) and adding small caps. The developed Europe and developed Pacific funds are adding small caps. The emerging markets fund is adding China A shares and small caps.

One source from before the transitions began:
https://institutional.vanguard.com/VGAp ... FundChgsQA
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Re: Differences among Vanguard International funds?

Post by abhikush »

lack_ey wrote:
abhikush wrote:
livesoft wrote:The entire graphic needs to be updated with the changes made by Vanguard to their funds.
What changes were made. I can't find anything. Morning Star Instant X-Ray matches for VXUS and 90/10 VEU/VSS.
Changes are in progress (M* data can be a bit stale) and don't apply to those funds.

The developed ex-NA fund is becoming developed ex-US (adding Canada) and adding small caps. The developed Europe and developed Pacific funds are adding small caps. The emerging markets fund is adding China A shares and small caps.

One source from before the transitions began:
https://institutional.vanguard.com/VGAp ... FundChgsQA
May be I am missing something but the link that you provided talks about changes to other international funds: Emerging Market (VWO), Developed Markets (VEA), Europe (VGK) and Pacific (VPL). I don't see any changes to VXUS, VEU and VSS.
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Re: Differences among Vanguard International funds?

Post by livesoft »

The graphic does have VEA and VWO in it, so that suggests the graphic needs changing, doesn't it?
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Re: Differences among Vanguard International funds?

Post by lack_ey »

abhikush wrote:
lack_ey wrote:
abhikush wrote:
livesoft wrote:The entire graphic needs to be updated with the changes made by Vanguard to their funds.
What changes were made. I can't find anything. Morning Star Instant X-Ray matches for VXUS and 90/10 VEU/VSS.
Changes are in progress (M* data can be a bit stale) and don't apply to those funds.

The developed ex-NA fund is becoming developed ex-US (adding Canada) and adding small caps. The developed Europe and developed Pacific funds are adding small caps. The emerging markets fund is adding China A shares and small caps.

One source from before the transitions began:
https://institutional.vanguard.com/VGAp ... FundChgsQA
May be I am missing something but the link that you provided talks about changes to other international funds: Emerging Market (VWO), Developed Markets (VEA), Europe (VGK) and Pacific (VPL). I don't see any changes to VXUS, VEU and VSS.
I said that "changes [...] don't apply to those funds" where "those funds" refers to VXUS, VEU, and VSS. I then described the changes to the funds that actually are shifting, which do not include VXUS, VEU, and VSS, but do include funds that are included in the OP graphic.
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Re: Differences among Vanguard International funds?

Post by abhikush »

livesoft wrote:The graphic does have VEA and VWO in it, so that suggests the graphic needs changing, doesn't it?
Agreed. I was focusing on comparison between VXUS and VEU/VSS, which is not changing.
lack_ey wrote:I said that "changes [...] don't apply to those funds" where "those funds" refers to VXUS, VEU, and VSS. I then described the changes to the funds that actually are shifting, which do not include VXUS, VEU, and VSS, but do include funds that are included in the OP graphic.
:oops: I missed that line and went directly to the link.
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Re: Differences among Vanguard International funds?

Post by jasonwc »

Given that Vanguard has added small cap and Canadian stocks to VEA, one should be able to replicate VXUS by holding VEA and VWO in a 83/17 ratio (Actually, VWO contains Chinese A-Shares which VXUS does not, but I don't consider this a problem). This should actually be cheaper than holding VXUS. VXUS charges an ER of 0.14% while VEA is 0.09% and VWO is 0.15%. This results in a blended ER of .10%. However, 4 basis points probably isn't worth worrying about.

I'm also not sure why it would be cheaper to hold VEA and VWO rather than simply holding VXUS. The Total International fund is considerably larger than VEA or VWO combined ($187 billion for Total International versus $54 billion for VEA and $50 Billion for VWO - including all share classes tracking the same index). In contrast, it's actually cheaper to hold the Total US Market (0.05% ER) than to hold large caps and small/mid caps seperately, since the Total US Index has the same ER as the large cap/S&P 500 funds, while the small cap funds funds are more expensive.
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Re: Differences among Vanguard International funds?

Post by jhfenton »

jasonwc wrote:Given that Vanguard has added small cap and Canadian stocks to VEA, one should be able to replicate VXUS by holding VEA and VWO in a 83/17 ratio (Actually, VWO contains Chinese A-Shares which VXUS does not, but I don't consider this a problem). This should actually be cheaper than holding VXUS. VXUS charges an ER of 0.14% while VEA is 0.09% and VWO is 0.15%. This results in a blended ER of .10%. However, 4 basis points probably isn't worth worrying about.

I'm also not sure why it would be cheaper to hold VEA and VWO rather than simply holding VXUS. The Total International fund is considerably larger than VEA or VWO combined ($187 billion for Total International versus $54 billion for VEA and $50 Billion for VWO - including all share classes tracking the same index). In contrast, it's actually cheaper to hold the Total US Market (0.05% ER) than to hold large caps and small/mid caps seperately, since the Total US Index has the same ER as the large cap/S&P 500 funds, while the small cap funds funds are more expensive.
I don't understand the cost structure for Total International either. Based on the recent annual report, the costs for last year were as follows:

"The fund expense ratios shown are from the prospectus dated February 26, 2015, and represent estimated costs for the current fiscal year.
For the fiscal year ended October 31, 2015, the fund’s expense ratios were 0.19% for Investor Shares, 0.13% for ETF Shares, 0.12% for
Admiral Shares, 0.10% for Institutional Shares, and 0.07% for Institutional Plus Shares."

So we might see an announcement of a slight reduction at the end of February, but it won't be below 12 or 13 bp for VTIAX or VXUS. (VWO/VEMAX will likely remain at 15 bp; and we don't have the annual report yet for VEA/VTMGX.)
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Re: Differences among Vanguard International funds?

Post by jasonwc »

Well, that explains why the Bogleheads Wiki shows the ER for VXUS as 0.12% and not the 0.14% I see on Vanguard's website. I did a Google search for an ER change but couldn't find anything. Should have checked the prospectus. Thanks.
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Re: Differences among Vanguard International funds?

Post by investmentfrog »

Just wanted to let y'all know that there is a wiki that addresses this as well:
https://www.bogleheads.org/wiki/Approxi ... ock_market
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vgk and vea

Post by looking »

what is difference between vgk and vea---both European developed market inst it ??? maybe i missing something
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Re: vgk and vea

Post by triceratop »

looking wrote:what is difference between vgk and vea---both European developed market inst it ??? maybe i missing something

Product Summary, VEA:
Provides a convenient way to match the performance of a diversified group of stocks of large-, mid-, and small-cap companies located in Canada and the major markets of Europe and the Pacific region.
Product Summary, VGK:
Holds stocks of companies located in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
Source: Vanguard

Seems straightforward.
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Re: Differences among Vanguard International funds?

Post by BrandonBogle »

I'm confused a bit here. With the relatively recent changes at Vanguard for VEA, are VEA and VEU now following the same index and fundamentally the same fund? If not, what are the differences between them?

I currently TLH harvest between VXUS and VEU, so wondering if I should replace VEU with VEA in that process.
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