Approximating total international with developed and emerging

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RedJunglefowl
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Approximating total international with developed and emerging

Post by RedJunglefowl » Wed Jul 25, 2018 2:00 am

How do I approximate Vanguard total international stock market (VTIAX) using just Vanguard developed markets
index (VTMGX) and Vanguard emerging markets stock index (VEMAX)?

The wiki page
https://www.bogleheads.org/wiki/Approxi ... ock_market does not quite give me the answer I am looking for since it only has more complicated approximations involving additional funds that might have some overlapping holdings.

Is the "emerging markets" fraction on https://investor.vanguard.com/mutual-fu ... view/vtiax the correct fraction?

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vineviz
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Re: Approximating total international with developed and emerging

Post by vineviz » Wed Jul 25, 2018 2:12 am

Yes, that’s the right fraction: about 80/20 right now.
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Northern Flicker
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Re: Approximating total international with developed and emerging

Post by Northern Flicker » Wed Jul 25, 2018 2:13 am

About 80/20. There is no exact weighting at present because Vemax holds China A-shares and VTIAX does not. You can look at the DM percentage of VTIAX on the Vanguard web site and use that as the weighting of Vtmgx in the pairing.

Note that it drifts over time as markets don’t move in perfect lockstep. If you set the cap-weighted mix as your allocation, you don’t have to rebalance it.
Last edited by Northern Flicker on Sat Jul 28, 2018 4:57 pm, edited 1 time in total.
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Starchild
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Re: Approximating total international with developed and emerging

Post by Starchild » Wed Jul 25, 2018 5:48 am

I didn't realize it has such EM exposure. Is that because Tencent, BABA, and Samsung are in the top 10 holdings?

Northern Flicker
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Re: Approximating total international with developed and emerging

Post by Northern Flicker » Wed Jul 25, 2018 6:55 pm

No, it is because the sum of market cap of all EM holdings in vtiax is about 20%. In fact, Samsung is a Korean company, which is classified as DM in the FTSE indices Vanguard uses for these funds. This question could be answered more reliably and more efficiently by looking at the portfolio tab for vtiax on Vanguard's web site.
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RedJunglefowl
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Re: Approximating total international with developed and emerging

Post by RedJunglefowl » Fri Jul 27, 2018 12:01 am

Thanks!

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