Author Topic: International Stocks/ETF advice  (Read 2088 times)

confused101

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International Stocks/ETF advice
« on: November 17, 2018, 06:11:42 PM »
I apologize in advance if this question has been posted before but could not locate any recent threads.
I need to invest more in International stocks to balance my portfolio( am in USA) and wanted to know what ETFs (possibly Vanguard) you invest in. I researched VTIAX and see if has not been performing well and has Morningstars 3 star rating. There is an article in yahoo in June that this fund is a must buy. Maybe, I should not read into outside noise.
Please advice.

jacoavluha

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Re: International Stocks/ETF advice
« Reply #1 on: November 17, 2018, 06:36:07 PM »
VXUS, IXUS

Andy R

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Re: International Stocks/ETF advice
« Reply #2 on: November 17, 2018, 08:29:05 PM »
I researched VTIAX and see if has not been performing well

What tends to happen is that different markets move up and down out of sync. For a period, one will do better than the other, and for another period the other will do well, and so on while the first one comes back to it's long term average (whatever that is and is unknowable until it is in the past).
So buying an asset class that has out performed often means it will under perform in the future and vice versa. But just to piss you off, if you buy the laggard it could well continue to under perform for much longer than you expected.
So in summary
1. Past performance is no indication of future performance
2. Recent past performance is a REALLY bad metric to use when picking stocks
3. When you accept that nobody has any idea which will out perform, you can just buy the market cap, which is the price and ratios the entire market valued them all and go and enjoy your life.


Radagast

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Re: International Stocks/ETF advice
« Reply #3 on: November 17, 2018, 11:35:03 PM »
My taxable accounts use VEA and VWO.

confused101

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Re: International Stocks/ETF advice
« Reply #4 on: November 17, 2018, 11:35:45 PM »
Thank you  everyone for your wisdom and advice

shinn497

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Re: International Stocks/ETF advice
« Reply #5 on: November 18, 2018, 01:22:52 AM »
My taxable accounts use VEA and VWO.

Are you in betterment? Since that is what they do.

MustacheAndaHalf

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Re: International Stocks/ETF advice
« Reply #6 on: November 18, 2018, 01:39:18 AM »
Morningstar ratings only use a few years of data.  You're better off using decades of data to decide what works together in a portfolio.  Also, past results do not necessarily indicate future performance.

You could buy IXUS (iShares Core International) at Vanguard or Fidelity for $0/trade.  That tracks the developed and emerging markets outside the U.S.  If you don't like ETFs, mutual funds tend to be specific to where you have your account.  Vanguard's VGTSX tracks the same thing if you have a Vanguard account.

jacoavluha

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Re: International Stocks/ETF advice
« Reply #7 on: November 18, 2018, 07:09:04 AM »
VEA plus VWO at about 85:15 ratio is about equivalent to VXUS or IXUS, though some prefer the two funds as you may argue the two provide a little more diversification (VWO includes China A shares) and more opportunity to TLH in a taxable account or the opportunity to overweight emerging markets if you want more risk. I prefer the one fund simplicity. IXUS is a little more tax efficient than VXUS.

Scandium

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Re: International Stocks/ETF advice
« Reply #8 on: November 19, 2018, 08:53:45 AM »
I researched VTIAX and see if has not been performing

So a great time to buy then huh? Would you want to buy into something that has been shooting up lately? Why does everyone agree with 'buy low, sell high', but then so many don't want to buy into something that isn't doing well..? :S 

Radagast

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Re: International Stocks/ETF advice
« Reply #9 on: November 20, 2018, 09:09:26 PM »
My taxable accounts use VEA and VWO.

Are you in betterment? Since that is what they do.
Nope, but how I perceive the world may cause me to invest in a similar fashion to Betterment's allocations.

shinn497

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Re: International Stocks/ETF advice
« Reply #10 on: November 20, 2018, 10:05:54 PM »
Do you believe in home bias? That is their Justification for a 45% int weighting.

Radagast

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Re: International Stocks/ETF advice
« Reply #11 on: November 20, 2018, 10:32:55 PM »
Do you believe in home bias? That is their Justification for a 45% int weighting.
That's a tough one. First I should point out that I just looked up the Vanguard Total World Stock Index Fund VTWSX and it lists US stocks as 55% of the fund, so if Betterment has 45% international that is market cap weighted, not home bias. I am personally equally split between the US and foreign.

It depends on what economic picture of the universe you believe in. If markets are efficient, then there are two things for home bias: 1) Currency risk beyond a modest amount is uncompensated risk, and 2) in the event of unfriendliness one or more countries may place capital controls on money crossing the border. There is one thing against home bias: something bad might happen to your specific country or its markets, with minimal impact on the rest of the world, or perhaps your country simply fails to return enough to meet your goals while the others collectively do.

So as a simple minded person I say 2:1, if markets are efficient then include international stocks but also have a home bias.

The other economic view of the universe says that bad market events happen often and are worse than would "normally" be expected. Markets are unpredictable rather than efficient. Diversification is the only free lunch, so eat all you can. With this mindset I'd want at least market weight in foreign stocks. There is a lot more of the world "out there" to protect me against the extremely bad downturns which have a good chance of happening. Don't be overweight in a single political and economic system which is heavily concentrated along a tiny section of coastline. Since I overweight international by being 50:50 I guess this might be closer to my view in practice.

MustacheAndaHalf

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Re: International Stocks/ETF advice
« Reply #12 on: November 21, 2018, 03:16:17 AM »
I wouldn't recommend asking other people their specific home bias, because their tolerance for risk can be different than yours.  If you take Radagast's 50% international, and developed markets do badly, you could easily panic and sell.  That's a really bad time to realize your risk tolerance is lower than your allocation.

Vanguard has a white paper about home country bias, and how much international to allocation to use.
https://www.vanguard.com/pdf/ISGGEB.pdf
You might allocate 20% if you're scared of international, or on up to 40% if you're comfortable with it.