Looking to see what most people do with their international investment allocation. I am sure there are many that do not invest in International at all. For those that do.. Do you just invest in a total international ETF like VXUS or do you split it up between Developed VEA and Emerging Markets VWO tilting towards one or the other. I currently split mine with VEA and VWO but with essentially the same weighting as VXUS about 26ish% into EM and the remaining in Developed. For those intersted I have about 28% of my total portfolio in International. I am in VEA and VWO seperately as that was recommended to me by a previous Financial Advisor who I no longer work with. I am stuggling to see the advantage of keeping seperate except for some tax loss harvesting opportunities in a taxable account. I would likely leave my taxable account as is due to not wanting to take a capital gain hit, but for my Roth and IRA's should I consider consildating into VXUS only. Portfolio Visualizer has .1% difference in return if split between VEA and VWO. Does anyone have other international investment plans that would differ from the above?
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The Index Fund GuideReplies (5)
PLoftPAC
1 year ago
I keep 10-15% in Vanguard Total International Index. I have done this for years, and I think in today's US political climate, it's even more poignant. I just set up both of my new grad daughters with 90% S&P Index (VOO equiv) and 10% total International in their respective plans as well.
Pat
Jarrett Sebo
1 year ago
0% international here. I’ve been debating whether that needs to change here lately.
UncleFrank
1 year ago
Neither, because those large cap tilted funds are actually not very well diversified from large US companies, other than the US having a heavy tech sector weighting. Rather, they are largely just a currency speculation.
I use factor-tilted funds like AVDV and AVES for international value and IDMO and EMQQ for international growth/tech to get much better diversification from US large caps. But these are only small allocations anyway.
1095toFi
1 year ago
Thanks for the response.
Could you explain further.
When looking at fund overlap there is 0% overlap when comparing VOO to VXUS, VEA and VWO.
I can udnerstand a small cap tilt within your international allocation as you may do in the US. Why do you say they are not diversified from large US companies when there are no overlapped holdings when comparing them to each other?
UncleFrank
1 year ago
Because Ford and Toyota, for example, perform similarly even though their headquarters are in different countries. Same for most large-cap companies that sell into world-wide markets.
You are making a fundamental error by equating "diversification" with "different." To be diversified, things need to be working in different markets and actually perform substantially differently. Just having different names tells you nothing.
The main difference between large cap US companies and international large cap companies that sell into world-wide markets amounts to relative currency speculation. When dollar is weak, the international does better and when dollar is strong, the US does better. This has been true since the 1970s.
Here, listen to this and read the links for more information about this.
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