hdas wrote: ↑
Sat Nov 16, 2019 8:57 am
For my international exposure I use:
Vanguard International Growth Fund Admiral Shares (VWILX)
iShares Edge MSCI Multifactor Intl Small-Cap ETF (ISCF)
Vanguard FTSE Emerging Markets ETF (VWO)
I don’t know yet how to open room for EYLD.
For ex-US (50% of equities), I use
VSS/Vanguard FTSE All-world ex-US Small Cap (this is our largest holding)
VEMAX/Vanguard FTSE Emerging Markets Admiral (if the expense gap with VWO widens further, I will convert this to VWO)
FPADX/Fidelity Emerging Markets Index (in my HSA at Fidelity) (only 7.5 bp, but does not include small caps)
EYLD/Cambria Emerging Shareholder Yield
VTMGX/Vanguard FTSE Developed Markets Admiral (a new and still tiny position in my 401(k))
VTMGX is the only international index fund in my 401(k), so I am being forced by the math of retirement plan contribution limits to start using it. (My wife's new 401(k), when she's eligible in January is all American Funds--ick--so that will not help.) I had dropped VTMGX/VEA a couple of years ago in favor of all VSS, just to simplify things.
Now that all ETFs are commission-free at Fidelity, I would like to switch my FPADX to VWO. FPADX is 4.5 bp cheaper, but VWO only trails its index by 1 bp over 3 years and 2 bp over 5 years. (VWO is actually +5 bp/year over 10 years.) I assume it's due to security lending revenue from the smaller-cap EM stocks. FPADX doesn't track its index as closely. (Fidelity makes it impossible to buy an ETF and sell a mutual fund in an HSA without being out of the market for a day. I have something like $2,500 in cash in the HSA, the rest FPADX, and I would have to move my FPADX to VWO $2,500 at a time. So it would take me a month of daily purchases and sales just before the close.
I've watched ISCF, but I haven't seen enough of a value tilt to justify its extra 28 bp of expense versus VSS, especially when VSS brings some EM small cap at that price. If I were to buy a "multifactor" fund, I would want it to be a value fund with a negative quality/junk (and maybe negative momentum) screen, not a fund that emphasizes all the factors equally. With iShares also using sector and country constraints to minimize tracking error, I am not convinced that it will earn its additional fee.