Thoughts on International Growth Fund (VWIGX)

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schildkrote
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Thoughts on International Growth Fund (VWIGX)

Post by schildkrote »

Hey guys,

I'm trying to increase my international exposure as well as rebalance since international has been lagging the US market. I think the US dollar value has bounced off its ceiling meaning the ex-US market is going to close the gap slightly on the US market. Before you Bogleheads scold me, I'm not trying to time the market, its an observation I have made and simply want to rebalance and increase exposure.

I currently own near equal distributions of VEA/VWO/SCHC/DGS International ETFs spread out over Taxable and Roth to make up 20% of my portfolio. I was looking at the Vanguard International Growth Fund (VWIGX), it's an actively managed fund that has been around awhile and has been quite successful, but I fear its large allocations in the big Chinese tech companies which I already have exposure in with VWO. I currently also own the Vanguard US Growth Fund (VWUSX) which has done pretty well in the virus recovery that I was going to use to fund the purchase. This would be in a Roth account for what its worth. What's everyone's thoughts on the Vanguard International Growth fund and how it fits into my current allocations. Does it have room to grow?

I have thick skin haha. :sharebeer
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grabiner
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Re: Thoughts on International Growth Fund (VWIGX)

Post by grabiner »

Vanguard International Growth is a well-diversified, low-cost, actively-managed fund. Therefore, it is a reasonable choice as long as you hold it in an IRA (to avoid large tax bills), and as long as you aren't chasing performance (it tracked the international indexes very well through 2016, but has crushed them over the last four years and is Vanguard's best-performing international fund over all recent time periods). You have to be aware of the growth bias, as you presumably are if you hold US Growth.

It was my first international fund, bought in 1997, but I made the mistake of holding it in a taxable account. After I learned about tax-efficient investing, I replaced the fund with Tax-Managed International (now Developed Markets Index).
Wiki David Grabiner
gjlynch17
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Re: Thoughts on International Growth Fund (VWIGX)

Post by gjlynch17 »

International Growth is a solid choice. Like David, it was my first International Fund in the late 1990s. It is tech heavy for an international fund and not a "pure" international fund. Two of its five largest holdings are Tesla and Amazon. I no longer own International Growth because I prefer a pure-play international fund but that is a personal preference. Overall, it is a strong fund.
confusedinvestor
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Re: Thoughts on International Growth Fund (VWIGX)

Post by confusedinvestor »

Blackrock changed their Target Allocation ETF/MF Models portfolios for financial advisors from International Blend (IXUS) to International Growth IEG - Shares MSCI EAFE Growth ETF

Does anyone knows Why Vanguard ex-US Growth Active (VWILX) holds 32% in Growth Tilt vs Blakcrock ex-US Growth Index (EFG) 16% ?

PV link below

https://www.portfoliovisualizer.com/fun ... hmark=IXUS

Ps: Full disclosure, I'm not a Fin Advisor, but have access to BlackRocks FA material (b/c I've a S65 lic) and my own portfolio is 3 Fund - ITOT/IXUS/AGG.


Blackrock's rationale:

Trade Rationale
• Asset Allocations: We are modestly positioned in favor of riskier assets but do so in measured steps. We are increasing our exposure to equities,
and in investment grade credit where we expect spreads to compress. The ability of bond and equity sells in this rebalance to generate tax-losses
allows for more adjustments than usual.
• US Equities: We increase our overweight to US equities. Fundamental earnings signals favor the US over non-US developed markets
(DM). We express those views through factor and regional selection choices, and we are increasing the ESG exposure we added earlier this year
based on our expectation of continued outperformance from ESG.
• Factors: Our analysis shows that the value factor has historically shined during periods of economic recovery; given our expectations of a rebound,
we think now is the time to add to value. We trim our exposure to minimum volatility and quality, recognizing that their protective qualities
served us well during the downturn but may be less desirable during a rebound.
• Sectors: Our strategic allocation to global technology remains; strong cash flows, resilient revenues and low debt load offer a compelling mix
in this environment. We are also introducing a strategic allocation to medical devices, a healthcare sub-sector. In our view, the Covid-19 crisis
and ensuing government spotlight represents a significant structural change and has enhanced the value proposition for this sector in the longterm.
• International Developed Market Equities: We move further underweight international DM equities. We also adjust the composition of the
exposure to tilt toward growth and away from the tech-light, value-heavy and cyclically oriented nature of the region. Policy support in mainland
Europe, where the economy seemed vulnerable even before Covid-19, appears to be underwhelming and insufficient.
• Emerging Market (EM) Equities: We are adding to EM equities, funded from DM, based on strong virus mitigation and policy stimulus efforts. We
are positioning for some tax loss harvesting by rotating into the ESG-focused exposure.
• Fixed Income: We move modestly underweight bonds relative to stocks and take a more credit-heavy tilt. The largest rotation across our bond
portfolios is out of US treasuries and into short- and long-term investment grade (IG) credit. Additionally, we move out of intermediate-term IG credit
and MBS and into longer term IG credit, where we see the potential for better risk adjusted returns as spreads gradually compress. Rate duration is
reduced slightly in most portfolios following a strong drop in US treasury yields.
dru808
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Re: Thoughts on International Growth Fund (VWIGX)

Post by dru808 »

schildkrote wrote: Tue Jun 02, 2020 8:17 pm I think the US dollar value has bounced off its ceiling meaning the ex-US market is going to close the gap slightly on the US market. Before you Bogleheads scold me, I'm not trying to time the market, its an observation I have made and simply want to rebalance and increase exposure.

:wink:

good luck with the non timing!
65% US equity | 25% ex US equity | 10% US long bond index
gjlynch17
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Re: Thoughts on International Growth Fund (VWIGX)

Post by gjlynch17 »

confusedinvestor wrote: Tue Jun 02, 2020 11:30 pm Blackrock changed their Target Allocation ETF/MF Models portfolios for financial advisors from International Blend (IXUS) to International Growth IEG - Shares MSCI EAFE Growth ETF

Does anyone knows Why Vanguard ex-US Growth Active (VWILX) holds 32% in Growth Tilt vs Blakcrock ex-US Growth Index (EFG) 16% ?

PV link below

https://www.portfoliovisualizer.com/fun ... hmark=IXUS
EFG is limited to developed countries outside North America. VWILX invests in China and the United States (strange for an International fund) and its largest holdings include fast growing, high multiple tech companies: Alibaba, Tencent, Tesla and Amazon. None of those companies are in EFG, which is limited to slower-growing markets (and companies) in Europe and Asia.
confusedinvestor wrote: Tue Jun 02, 2020 11:30 pm
Blackrock's rationale:

• International Developed Market Equities: We move further underweight international DM equities. We also adjust the composition of the
exposure to tilt toward growth and away from the tech-light, value-heavy and cyclically oriented nature of the region. Policy support in mainland
Europe, where the economy seemed vulnerable even before Covid-19, appears to be underwhelming and insufficient.
• Emerging Market (EM) Equities: We are adding to EM equities, funded from DM, based on strong virus mitigation and policy stimulus efforts. We
are positioning for some tax loss harvesting by rotating into the ESG-focused exposure.
On a related note, BlackRock's recommendation to move from IXUS to IEG is not only a shift away from blend to growth, but it is also a shift away from emerging markets, especially China. That seems inconsistent with the rationale above. The advisor to our firm's defined benefit plan uses BlackRock's advisory services and I have a lot of respect for their opinions but something doesn't quite add up between the recommendation and the rationale.
mrhelios
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Re: Thoughts on International Growth Fund (VWIGX)

Post by mrhelios »

52 week high, while the overall market is down is rather impressive.
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CyclingDuo
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Re: Thoughts on International Growth Fund (VWIGX)

Post by CyclingDuo »

schildkrote wrote: Tue Jun 02, 2020 8:17 pmI'm trying to increase my international exposure as well as rebalance since international has been lagging the US market.This would be in a Roth account for what its worth. What's everyone's thoughts on the Vanguard International Growth fund and how it fits into my current allocations. Does it have room to grow?
We've owned it since 1989 and been very happy with it as one of our international investments. :beer
"Save like a pessimist, invest like an optimist." - Morgan Housel
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grabiner
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Re: Thoughts on International Growth Fund (VWIGX)

Post by grabiner »

confusedinvestor wrote: Tue Jun 02, 2020 11:30 pm Blackrock changed their Target Allocation ETF/MF Models portfolios for financial advisors from International Blend (IXUS) to International Growth IEG - Shares MSCI EAFE Growth ETF

Does anyone knows Why Vanguard ex-US Growth Active (VWILX) holds 32% in Growth Tilt vs Blakcrock ex-US Growth Index (EFG) 16% ?
It is a difference in the definition of growth. Vanguard International Growth has a 20.85 P/E and 2.56 P/B, while MSCI EAFE Growth ETF has a 26.03 P/E and 3.13 P/B. If you measure growth/value by those numbers (which is what most indexes do), then the growth ETF has a stronger growth bias. If you use multiple measures, as Morningstar does, then International Growth may have a stronger growth bias. International Growth also has a somewhat stronger multifactor analysis growth exposure; this means that it has done better relative to the market when growth outperformed value. (All data from Morningstar.)
Wiki David Grabiner
occambogle
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Re: Thoughts on International Growth Fund (VWIGX)

Post by occambogle »

I am holding the Admiral class of this fund VWILX and it seems a reasonable choice. I didn't have any standard Total International optiions in my 401k, and the other international options were weird and high expense ratio. It's a bet on large-cap growth stocks, for sure, but I think I'm OK with that and it seems reasonably diversified.
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tooluser
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Re: Thoughts on International Growth Fund (VWIGX)

Post by tooluser »

I bought a small amount of VWIGX many years ago as part of Bob Brinker's "Active/Passive" portfolio recommendation (10% VWIGX, 90% VTSMX: 10% International Growth, 90% Total US Stock Market). I never added anything to these holdings, or rebalanced.

VWIGX didn't do nearly as well for many years, consistently being less than 10% of the target allocation, until this year. Now it's a little over 10%.

As of today, dividends not included:
YTD: VWIGX is up 35.80%, vs VTSMX is up 7.63%
1-Yr: VWIGX is up 48.38%, vs VTSMX is up 15.30%

That is significant. Tesla is the third largest holding of VWIGX. I did not realize I was buying a fund that could buy Tesla, but I won't argue that for now.
dru808
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Re: Thoughts on International Growth Fund (VWIGX)

Post by dru808 »

My international growth fund of funds smokes vanguard international growth. 98% qqq 2% vt. worldwide exposure, every company and a heck of a lot better performance.
65% US equity | 25% ex US equity | 10% US long bond index
000
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Re: Thoughts on International Growth Fund (VWIGX)

Post by 000 »

dru808 wrote: Sun Oct 25, 2020 6:57 pm My international growth fund of funds smokes vanguard international growth. 98% qqq 2% vt. worldwide exposure, every company and a heck of a lot better performance.
lol, nice
BV3273
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Re: Thoughts on International Growth Fund (VWIGX)

Post by BV3273 »

I have it in my 401k. Up 38%-ish YTD. I’ll take it. Not a pure international play but I’d rather not have any international anyway due to its lackluster performance.
occambogle
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Re: Thoughts on International Growth Fund (VWIGX)

Post by occambogle »

US Growth has the edge year-to-date but in the last 6 months VWIGX/VWILX has actually beaten US Growth (VWUAX), with both well above VOO and VXUS. Obviously that's a short period, but still interesting:

https://stockcharts.com/h-perf/ui?s=VWI ... 5787934358
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