Author Topic: Best International market Vanguard funds?  (Read 605 times)

kukrik

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Best International market Vanguard funds?
« on: May 10, 2019, 07:56:55 AM »
Just wondering what people's opinions are. Trying to figure out how to diversify my portfolio.

EvenSteven

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Re: Best International market Vanguard funds?
« Reply #1 on: May 10, 2019, 09:27:42 AM »
VTIAX is the mutual fund version and VXUS is the ETF version of total international. It is kind of like the international version of VTSAX (or VTI). Start with that.

kukrik

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Re: Best International market Vanguard funds?
« Reply #2 on: May 10, 2019, 10:10:04 AM »
Cool, that is sort of what I was thinking, good to get confirmation.

habaneroNorway

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Re: Best International market Vanguard funds?
« Reply #3 on: May 10, 2019, 12:05:49 PM »
A global index fund contains roughly 50% US equities as the US stock market is roughly 50% of the world's total. The VITAX is foreign-only as far as I can tell. By investing in an international fund you are also adding FX risk to the cocktail unless its a fund managed on an FX hedged basis. This will be mainly EUR and JPY FX risk.
« Last Edit: May 10, 2019, 12:07:57 PM by habaneroNorway »

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Re: Best International market Vanguard funds?
« Reply #4 on: May 10, 2019, 01:52:57 PM »
A global index fund contains roughly 50% US equities as the US stock market is roughly 50% of the world's total. The VITAX is foreign-only as far as I can tell. By investing in an international fund you are also adding FX risk to the cocktail unless its a fund managed on an FX hedged basis. This will be mainly EUR and JPY FX risk.
Closer to 60% right now.

By not using "international" you're massively increasing risk due to lack of diversification. Two sides of the same coin.

habaneroNorway

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Re: Best International market Vanguard funds?
« Reply #5 on: May 10, 2019, 02:06:36 PM »
Yeah - the main point was to actually diversify. For a us investor that does not mean buy global equities. For me in a tiny European country it does. But donít forget the fx risk. You make usd, all your bills are in usd but part of your wealth will now be denominated in a foreign currency. Itís not a problem, just know itís there if the fund is unhedged in fx space. And fx can move. A lot.

EUR is the biggest foreign market. In the last 20 years the cost of 1 EUR has been between 0.8 and 1.6 USD roughly.
« Last Edit: May 10, 2019, 02:08:23 PM by habaneroNorway »

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Re: Best International market Vanguard funds?
« Reply #6 on: May 10, 2019, 03:05:31 PM »
Yeah - the main point was to actually diversify. For a us investor that does not mean buy global equities. For me in a tiny European country it does. But donít forget the fx risk. You make usd, all your bills are in usd but part of your wealth will now be denominated in a foreign currency. Itís not a problem, just know itís there if the fund is unhedged in fx space. And fx can move. A lot.

EUR is the biggest foreign market. In the last 20 years the cost of 1 EUR has been between 0.8 and 1.6 USD roughly.
Everyone needs to diversify, being in a big country doesn't change that.

Valuations can move just as much as FX does, foreign currencies are just a tiny part of the story. What a stock is denominated in doesn't affect the underlying value.

MustacheAndaHalf

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Re: Best International market Vanguard funds?
« Reply #7 on: May 10, 2019, 09:17:22 PM »
If you want just one holding, you can buy VXUS and hold all non-US stocks in one ETF.  VXUS consists of ~20% emerging markets and ~80% developed markets, costing 0.09%/year (expense ratio).

You could split that into VEA and VWO: 80% in VEA (0.05% expense ratio), 20% in VWO (0.12% expense ratio) for an average expense ratio of 0.064%.  But it's probably not worth doing for the savings alone, since the savings compounded over 40% years adds up to 1% of assets.

There's also non-Vanguard ETFs (which are $0/trade at Vanguard) like IXUS (iShares).

cincystache

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Re: Best International market Vanguard funds?
« Reply #8 on: May 12, 2019, 07:26:14 PM »
VTWAX is a global stock market index fund (US and Int'l) I like the simplicity of one stock holding even if the expense ratio is slightly higher (0.10%)


MaaS

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Re: Best International market Vanguard funds?
« Reply #9 on: May 13, 2019, 09:21:00 AM »
VTWAX is a global stock market index fund (US and Int'l) I like the simplicity of one stock holding even if the expense ratio is slightly higher (0.10%)

I just don't understand this logic. Holding two funds - a US market index and a global ex-US index is pretty simple and opens up a whole world* of rebalancing opportunities over the long-term.

*Puns always intended.