International Growth (VWIGX) Outperformance

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irishguy
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International Growth (VWIGX) Outperformance

Post by irishguy »

What makes this fund outperform since inception nearly 40 years ago and recently as well? Average return since inception is over 10%. I noticed yesterday, which is not atypical, it was up nearly 1% whereas all other VG international funds (except one) were down!? Like many people here, for international, I have been using VG Total International Stock Index for my international equity fund holding. I usually stay the course and hate to chase after the performance but it's tempting to make a change! Any thoughts if I'm missing something here??
lgs88
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Re: International Growth (VWIGX) Outperformance

Post by lgs88 »

irishguy,

Financial markets dogma is that past performance =/= future performance.

That said, there are many devotees of Wellington, Wellesley, and PRIMECAP on this forum. VWIGX has, in fact, outperformed. I'm going to follow this thread, because it might just stimulate an interesting discussion!

lgs88
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ThereAreNoGurus
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Re: International Growth (VWIGX) Outperformance

Post by ThereAreNoGurus »

irishguy wrote: Tue Apr 14, 2020 4:00 pm What makes this fund outperform since inception nearly 40 years ago and recently as well? Average return since inception is over 10%. I noticed yesterday, which is not atypical, it was up nearly 1% whereas all other VG international funds (except one) were down!? Like many people here, for international, I have been using VG Total International Stock Index for my international equity fund holding. I usually stay the course and hate to chase after the performance but it's tempting to make a change! Any thoughts if I'm missing something here??
Huh... never thought I'd see it mentioned on BH. I've owned it since the early 80's. Never paid much attention to it versus other foreign funds. Still have no idea how it has done compared to others on a long term basis. I only noticed it maintained a fairly decent Morningstar rating over the years. I think that's the only international fund I own now.

(Probably purchased it back then while performance chasing. :D )
Last edited by ThereAreNoGurus on Tue Apr 14, 2020 4:37 pm, edited 1 time in total.
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JohnDindex
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Re: International Growth (VWIGX) Outperformance

Post by JohnDindex »

It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
MotoTrojan
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Re: International Growth (VWIGX) Outperformance

Post by MotoTrojan »

JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
Sneaky sneaky. Came here to mention it has hefty US exposure as you noted.

I boost my ex-US expected return by putting it all in small-value but I would hold total int before this growth fund.
The Broz
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Re: International Growth (VWIGX) Outperformance

Post by The Broz »

This is what I own for my international allocation as well. I do appreciate the notion that the US will not always outperform the world, but Total International just has not done well in a long time (I know.... past performance does not equal, etc.). So I thought I would partially break some rules, and get an active fund to cover my international and also not allocate a whole lot of my overall to it.
Last edited by The Broz on Tue Apr 14, 2020 7:36 pm, edited 1 time in total.
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Svensk Anga
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Re: International Growth (VWIGX) Outperformance

Post by Svensk Anga »

I looked at the 10-year growth chart on Vanguard. For the first six years, it was running essentially a dead heat with the MSCI index. Four years ago, it started to pull ahead. The fund uses two management companies. One of the managers started in 2016, coincident with the divergence. Watch for that fellow to get a better offer elsewhere if he is in fact responsible for the hot picks.
OldSport
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Re: International Growth (VWIGX) Outperformance

Post by OldSport »

MotoTrojan wrote: Tue Apr 14, 2020 4:39 pm
JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
Sneaky sneaky. Came here to mention it has hefty US exposure as you noted.

I boost my ex-US expected return by putting it all in small-value but I would hold total int before this growth fund.
What ex-US small-value do you use? How has that worked out for you recently?
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raven15
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Re: International Growth (VWIGX) Outperformance

Post by raven15 »

I split DW's 401k 50/50 between VWIGX and Primecap (VPMAX). I recall that VWIGX was the only international fund, and the only market-like US fund was S&P500, so I was like "might as well go all in." VWIGX has definitely been rocking the house in the 1.5 years since then, but we will shovel as much money as possible into both regardless and see how things come out. :greedy
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MotoTrojan
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Re: International Growth (VWIGX) Outperformance

Post by MotoTrojan »

OldSport wrote: Tue Apr 14, 2020 6:18 pm
MotoTrojan wrote: Tue Apr 14, 2020 4:39 pm
JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
Sneaky sneaky. Came here to mention it has hefty US exposure as you noted.

I boost my ex-US expected return by putting it all in small-value but I would hold total int before this growth fund.
What ex-US small-value do you use? How has that worked out for you recently?
FNDC. Relative to its broad market it has held up far better than US Small compared to Total. I’m happy and happily buying more.
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anon_investor
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Re: International Growth (VWIGX) Outperformance

Post by anon_investor »

JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
That seems like cheating. :beer
Nicolas
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Re: International Growth (VWIGX) Outperformance

Post by Nicolas »

It has 12.4% “North America” exposure per Vanguard (0.8% is Canada). Morningstar rates Risk “high” and Return also “high”. That being said awhile ago I noticed the outperformance and moved all of my international investment into the Admiral version of this fund, VWILX. The North American exposure doesn’t bother me. It’s 10% of my portfolio.
an_asker
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Re: International Growth (VWIGX) Outperformance

Post by an_asker »

anon_investor wrote: Tue Apr 14, 2020 6:50 pm
JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
That seems like cheating. :beer
That's exactly what I found out a few weeks back and was wondering what their definition of "International" is! They must have gotten some politician lawyer define the term for them. :oops:

PS: On the other hand, I think what they have is the real definition of "international" - the way the term is popularly used in the USA, it means "foreign" (I am not referring to how it is used in the stock market but in real life American situations), for example, International Students.
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

MotoTrojan wrote: Tue Apr 14, 2020 6:38 pm
OldSport wrote: Tue Apr 14, 2020 6:18 pm
MotoTrojan wrote: Tue Apr 14, 2020 4:39 pm
JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
Sneaky sneaky. Came here to mention it has hefty US exposure as you noted.

I boost my ex-US expected return by putting it all in small-value but I would hold total int before this growth fund.
What ex-US small-value do you use? How has that worked out for you recently?
FNDC. Relative to its broad market it has held up far better than US Small compared to Total. I’m happy and happily buying more.
FNDC is not doing any better than VXUS, are you mistaken for some other fund?

Source
Portfolio 1: FNDC
Portfolio 2: VXUS
2014-2020
Image
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

an_asker wrote: Tue Apr 14, 2020 7:15 pm
anon_investor wrote: Tue Apr 14, 2020 6:50 pm
JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
That seems like cheating. :beer
That's exactly what I found out a few weeks back and was wondering what their definition of "International" is! They must have gotten some politician lawyer define the term for them. :oops:

PS: On the other hand, I think what they have is the real definition of "international" - the way the term is popularly used in the USA, it means "foreign" (I am not referring to how it is used in the stock market but in real life American situations), for example, International Students.
Active managers have freedom to go anywhere, up to certain percentage of the portfolio, say 15% of an Intl fund can be invested in US according to the prospectus of most funds. Similarly active US funds are allowed to invest up to 15% of their portfolio in Intl stocks. They also have freedom in rare circumstances to increase cash allocation as high as 60% of the portfolio. You have to read the prospectus of each fund to know what their policy is.

Btw, International is a term the industry has focus group tested to have better marketing appeal than "foreign" - it has nothing to do with anything else, just another way for Wall Street to coin the terms that stick better.
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

VWIGX is having a lucky run, eventually it's luck will run out just like many other active funds. Just have a look at previous stalwarts such as Windsor, Windsor II, Selected Value, etc. They all eventually run out of steam and perform average or below average.
Nicolas
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Re: International Growth (VWIGX) Outperformance

Post by Nicolas »

Elysium wrote: Tue Apr 14, 2020 7:24 pm Btw, International is a term the industry has focus group tested to have better marketing appeal than "foreign" - it has nothing to do with anything else, just another way for Wall Street to coin the terms that stick better.
I guess the word “foreign” lends an air of suspicion to the fund for the xenophobic. Fidelity’s original foreign fund was called the “Overseas” fund, does that exclude countries attached by land to ours (I jest). That fund did spectacularly in the mid to late 80s as the dollar fell. I didn’t own any, sadly.
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

Nicolas wrote: Tue Apr 14, 2020 7:32 pm
Elysium wrote: Tue Apr 14, 2020 7:24 pm Btw, International is a term the industry has focus group tested to have better marketing appeal than "foreign" - it has nothing to do with anything else, just another way for Wall Street to coin the terms that stick better.
I guess the word “foreign” lends an air of suspicion to the fund for the xenophobic. Fidelity’s original foreign fund was called the “Overseas” fund, does that exclude countries attached by land to ours (I jest). That fund did spectacularly in the mid to late 80s as the dollar fell. I didn’t own any, sadly.
I am not xenophobic, and I have no problem calling them foreign, matter of fact I prefer that term better since it is more accurate representation. That said, that's probably one of the reason the focus groups have decided not to use it, just so it doesn't give an air of suspicion of "foreign".
averagedude
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Re: International Growth (VWIGX) Outperformance

Post by averagedude »

Learn something new everyday on this forum. I would had thought that this fund would be all International, but it has US exposure. According to the summary of this fund, it says it doesn't invest in US companies, but it does. Probably explains part of the outperformance.
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

averagedude wrote: Tue Apr 14, 2020 7:47 pm Learn something new everyday on this forum. I would had thought that this fund would be all International, but it has US exposure. According to the summary of this fund, it says it doesn't invest in US companies, but it does. Probably explains part of the outperformance.
Check the prospectus, probably says they could invest up to 15% in US, most active funds do have those clauses.
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Re: International Growth (VWIGX) Outperformance

Post by Nicolas »

averagedude wrote: Tue Apr 14, 2020 7:47 pm Learn something new everyday on this forum. I would had thought that this fund would be all International, but it has US exposure. According to the summary of this fund, it says it doesn't invest in US companies, but it does. Probably explains part of the outperformance.
The summary says it “focuses” on non-US companies, that doesn’t mean that’s all they invest in. So that leaves open that it could invest in U.S. companies. Nowhere does it say they don’t. See the summary copied from Vanguard, below.

Product summary
The International Growth Fund focuses on non-U.S. companies with high growth potential. Created in 1981, the fund employs an aggressive approach that attempts to capitalize on global economic expansion. For example, an attractive investment opportunity could be a non-U.S. consumer-products company that is experiencing rapid earnings growth. Because it invests in non-U.S. stocks, including those in developed and emerging markets, the fund can be more volatile than a domestic fund. Investors may wish to consider investing in this fund as a complement to an already diversified stock portfolio.


https://investor.vanguard.com/mutual-fu ... view/vwigx
Last edited by Nicolas on Tue Apr 14, 2020 10:36 pm, edited 1 time in total.
averagedude
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Re: International Growth (VWIGX) Outperformance

Post by averagedude »

Elysium wrote: Tue Apr 14, 2020 7:54 pm
averagedude wrote: Tue Apr 14, 2020 7:47 pm Learn something new everyday on this forum. I would had thought that this fund would be all International, but it has US exposure. According to the summary of this fund, it says it doesn't invest in US companies, but it does. Probably explains part of the outperformance.
Check the prospectus, probably says they could invest up to 15% in US, most active funds do have those clauses.
Thanks, I always assumed the summary of the fund would be good enough, but reading the full prospectus is what you call doing your due diligence. If I ever decide to invest in another asset class, I will read the full prospectus before considering investing.
OddsMaker
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Re: International Growth (VWIGX) Outperformance

Post by OddsMaker »

The bigger story than the US representation is the concentration in very growthy tech/e-commerce. I use it for my international allocation, but it’s really a big play on digital transformation, which I believe will continue to be a strong market trend. Just look at the top five holdings - Alibaba, Tencent, Tesla, ASML, and MercadoLibre, which is an Argentinian e-commerce company. I hope and believe the ride will continue, but this could also blow up if that trend slows.
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irishguy
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Re: International Growth (VWIGX) Outperformance

Post by irishguy »

Elysium wrote: Tue Apr 14, 2020 7:29 pm VWIGX is having a lucky run, eventually it's luck will run out just like many other active funds. Just have a look at previous stalwarts such as Windsor, Windsor II, Selected Value, etc. They all eventually run out of steam and perform average or below average.
Well, not sure there are many VG funds, especially "international" that have averaged 10%+ over that many years. I'll have to do some research on that. So I'm wondering whether that can really be considered lucky. If it was a shorter period, then yes.
MotoTrojan
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Re: International Growth (VWIGX) Outperformance

Post by MotoTrojan »

Elysium wrote: Tue Apr 14, 2020 7:16 pm
MotoTrojan wrote: Tue Apr 14, 2020 6:38 pm
OldSport wrote: Tue Apr 14, 2020 6:18 pm
MotoTrojan wrote: Tue Apr 14, 2020 4:39 pm
JohnDindex wrote: Tue Apr 14, 2020 4:37 pm It’s a great fund. I don’t own it but would be perfectly fine if I did.

Take a good look under the hood, two of the top ten holdings, amazon and Tesla.

Last time I checked those were not in the total international index......maybe not quite apples to apples

No doubt well managed fund either way
Sneaky sneaky. Came here to mention it has hefty US exposure as you noted.

I boost my ex-US expected return by putting it all in small-value but I would hold total int before this growth fund.
What ex-US small-value do you use? How has that worked out for you recently?
FNDC. Relative to its broad market it has held up far better than US Small compared to Total. I’m happy and happily buying more.
FNDC is not doing any better than VXUS, are you mistaken for some other fund?

Source
Portfolio 1: FNDC
Portfolio 2: VXUS
2014-2020
Image
Would you mind pointing me to where I said it had?

I said relative to a domestic small-value tilt.

I didn’t say it’s held up better than VXUS, but has held up better than VBR has to VTI for example.

Also here is a better comparison. Since inception of SFILX it has handily beat VG Total Int., even with the recent drawdown. Less drawdown in 2008 too.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

MotoTrojan wrote: Tue Apr 14, 2020 9:23 pm Also here is a better comparison. Since inception of SFILX it has handily beat VG Total Int., even with the recent drawdown. Less drawdown in 2008 too.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Okay, 2.74%, if that's the comparison then bonds were better. That said, I don't think it's a bad fund if you really feel the need to hold an Intl SC. Fundamental indexing is slightly better than high BtM value in my view.
Elysium
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Re: International Growth (VWIGX) Outperformance

Post by Elysium »

irishguy wrote: Tue Apr 14, 2020 9:20 pm
Elysium wrote: Tue Apr 14, 2020 7:29 pm VWIGX is having a lucky run, eventually it's luck will run out just like many other active funds. Just have a look at previous stalwarts such as Windsor, Windsor II, Selected Value, etc. They all eventually run out of steam and perform average or below average.
Well, not sure there are many VG funds, especially "international" that have averaged 10%+ over that many years. I'll have to do some research on that. So I'm wondering whether that can really be considered lucky. If it was a shorter period, then yes.
Like another poster said, they are riding on a Tech growth, making aggressive bets. It didn't do very well when Growth was out of favor in the early 2000's. Also, Vanguard has a habit of chopping and churning fund management, sometimes they add another team to run part of the money, you cannot rely on past performance to continue with active funds.
MotoTrojan
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Re: International Growth (VWIGX) Outperformance

Post by MotoTrojan »

Elysium wrote: Tue Apr 14, 2020 10:47 pm
MotoTrojan wrote: Tue Apr 14, 2020 9:23 pm Also here is a better comparison. Since inception of SFILX it has handily beat VG Total Int., even with the recent drawdown. Less drawdown in 2008 too.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Okay, 2.74%, if that's the comparison then bonds were better. That said, I don't think it's a bad fund if you really feel the need to hold an Intl SC. Fundamental indexing is slightly better than high BtM value in my view.
Let’s not make this a US vs. ex-US debate; relative performance to its region is the point.
not4me
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Re: International Growth (VWIGX) Outperformance

Post by not4me »

irishguy wrote: Tue Apr 14, 2020 4:00 pm What makes this fund outperform since inception nearly 40 years ago and recently as well?

Any thoughts if I'm missing something here??
I didn't go back & look at the 40 years, but initial thought is that the explanation is in the title. Growth has been outperforming value for a while.
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