International: anyone tilt emerging or small cap?
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International: anyone tilt emerging or small cap?
I have (what I think is) a reasonable 20% allocation to international in VXUS. I understand it's market weighted, which is the point of the index, but the largest holdings of VXUS are multinationals (much like VTI). In our current global economy, the multinationals are so intertwined, that I'm really not sure you're getting that much diversification by holding VXUS (which is why lots of people argue that VTI is plenty exposed to intl.)
I've done quite a bit of research and reading and I am thinking about a slight tilt to EM or intl. small cap. The reason is that I think they have the most potential for future growth. Obviously, I could be completely wrong on this as I don't have a crystal ball.
Is anyone else tilting EM or intl. small cap for their international holdings? If so, what's your logic and what are your holdings?
I've done quite a bit of research and reading and I am thinking about a slight tilt to EM or intl. small cap. The reason is that I think they have the most potential for future growth. Obviously, I could be completely wrong on this as I don't have a crystal ball.
Is anyone else tilting EM or intl. small cap for their international holdings? If so, what's your logic and what are your holdings?
Re: International: anyone tilt emerging or small cap?
It's a strategy question that's been bugging me. If the market tries to equalize the risk-adjusted returns of every sector of the stock market, should a boglehead then tilt towards those sectors that offer less correlation?
Or - will the market already take the value of anti-correlation into account and give those sectors a lower risk-adjusted return.
Or - will the market already take the value of anti-correlation into account and give those sectors a lower risk-adjusted return.
Re: International: anyone tilt emerging or small cap?
With only a 20% holding in international, a slight tilt to EM or international small cap probably wouldn't move the needle, you'd only be talking about a few percent at most. If you had a 40-50% international equity allocation or a crazy one like mine (90% international), then it might be worth it.
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Re: International: anyone tilt emerging or small cap?
VXUS seems to have about 20-25% in emerging markets according to the fact sheet from Vanguard.
All the best
All the best
Re: International: anyone tilt emerging or small cap?
Yes, I tilt to small cap. I own VEU / VEA in taxable originally as a pair for tax-loss harvesting. I own VEU, SPDW, VSS, and DGS in tax-advantaged.
9-box style grid for the foreign equities looks like this:
12-18-10
13-17-08
08-09-04
while M* reports that VTIAX / VXUS looks like this:
22-35-19
06-09-05
01-02-01
I do not tilt to emerging markets. Vanguard Portfolio Watch shows I have no tilt to emerging markets with 26% in my foreign equities and 25% expected.
9-box style grid for the foreign equities looks like this:
12-18-10
13-17-08
08-09-04
while M* reports that VTIAX / VXUS looks like this:
22-35-19
06-09-05
01-02-01
I do not tilt to emerging markets. Vanguard Portfolio Watch shows I have no tilt to emerging markets with 26% in my foreign equities and 25% expected.
Last edited by livesoft on Tue May 24, 2022 8:45 am, edited 2 times in total.
Re: International: anyone tilt emerging or small cap?
I do. My international allocation is about 40% VXUS, 40% developed small value (AVDV), and 20% dividend/small value emerging markets (DGS).
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Re: International: anyone tilt emerging or small cap?
Small cap value is arguably a better tilt within international - although small cap value EM is a bit tricky to invest in (low volume ETFs).
Last edited by burritoLover on Tue May 24, 2022 8:58 am, edited 1 time in total.
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Re: International: anyone tilt emerging or small cap?
Great point. If you look at some of the EMs they’re thinly traded. Any recommendations for a small cap intl?burritoLover wrote: ↑Tue May 24, 2022 8:36 am Small cap value is arguably a better tilt within international - although small cap EM is a bit tricky to invest in (low volume ETFs).
Re: International: anyone tilt emerging or small cap?
Avantis AVDV/AVESNYCaviator wrote: ↑Tue May 24, 2022 8:49 amGreat point. If you look at some of the EMs they’re thinly traded. Any recommendations for a small cap intl?burritoLover wrote: ↑Tue May 24, 2022 8:36 am Small cap value is arguably a better tilt within international - although small cap EM is a bit tricky to invest in (low volume ETFs).
Vanguard VSS
You might want to join Rational Reminder forum and read over there, will be a stronger contingent of small international and ISCV supporters over there.
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Re: International: anyone tilt emerging or small cap?
As far as small cap value, AVDV for developed international (as quietseas mentioned). I don't find a small-cap only by itself particularly attractive but if you look at factor investing and believe the reasoning there, small and value has a premium over market historically across the globe. AVES would be a good small cap value EM fund but M1 Finance doesn't allow you to trade in this ETF due to low volume.NYCaviator wrote: ↑Tue May 24, 2022 8:49 amGreat point. If you look at some of the EMs they’re thinly traded. Any recommendations for a small cap intl?burritoLover wrote: ↑Tue May 24, 2022 8:36 am Small cap value is arguably a better tilt within international - although small cap EM is a bit tricky to invest in (low volume ETFs).
Re: International: anyone tilt emerging or small cap?
I hold about 40% in international, and about 3/8 of that is in small value either as AVDV or FNDC.
Generally I’m accepting higher risk for higher expected returns
Generally I’m accepting higher risk for higher expected returns
Crom laughs at your Four Winds
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Re: International: anyone tilt emerging or small cap?
I will hop in after these wonderful recommendations and throw in:quietseas wrote: ↑Tue May 24, 2022 8:50 amAvantis AVDV/AVESNYCaviator wrote: ↑Tue May 24, 2022 8:49 amGreat point. If you look at some of the EMs they’re thinly traded. Any recommendations for a small cap intl?burritoLover wrote: ↑Tue May 24, 2022 8:36 am Small cap value is arguably a better tilt within international - although small cap EM is a bit tricky to invest in (low volume ETFs).
Vanguard VSS
You might want to join Rational Reminder forum and read over there, will be a stronger contingent of small international and ISCV supporters over there.
DISV from DFA
DFEV from DFA
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Re: International: anyone tilt emerging or small cap?
I have been thinking I have "too much" in small-cap and E.M. in my international holdings.
What %age of E.M. in int'l is considered neutral (not necessarily market-weight, but not a tilt)? I have been thinking that 20% of int'l is neutral, but maybe it is closer to 25%?
What %age of small-cap in int'l is considered neutral (not a tilt)?
In Fido, I hold IXUS, which shows 4% in small-cap and 16% in mid-cap. Would a small-cap tilt be 5%? 10%? 20%? Would you tilt small-cap only or mid-caps as well?
What %age of E.M. in int'l is considered neutral (not necessarily market-weight, but not a tilt)? I have been thinking that 20% of int'l is neutral, but maybe it is closer to 25%?
What %age of small-cap in int'l is considered neutral (not a tilt)?
In Fido, I hold IXUS, which shows 4% in small-cap and 16% in mid-cap. Would a small-cap tilt be 5%? 10%? 20%? Would you tilt small-cap only or mid-caps as well?
Re: International: anyone tilt emerging or small cap?
Nope. Only VG Total International index.NYCaviator wrote: ↑Tue May 24, 2022 8:14 am I have (what I think is) a reasonable 20% allocation to international in VXUS. I understand it's market weighted, which is the point of the index, but the largest holdings of VXUS are multinationals (much like VTI). In our current global economy, the multinationals are so intertwined, that I'm really not sure you're getting that much diversification by holding VXUS (which is why lots of people argue that VTI is plenty exposed to intl.)
I've done quite a bit of research and reading and I am thinking about a slight tilt to EM or intl. small cap. The reason is that I think they have the most potential for future growth. Obviously, I could be completely wrong on this as I don't have a crystal ball.
Is anyone else tilting EM or intl. small cap for their international holdings? If so, what's your logic and what are your holdings?
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
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Re: International: anyone tilt emerging or small cap?
I've been eyeing some of the new DFA ETFs. These look pretty good.donaldfair71 wrote: ↑Tue May 24, 2022 9:23 amI will hop in after these wonderful recommendations and throw in:quietseas wrote: ↑Tue May 24, 2022 8:50 amAvantis AVDV/AVESNYCaviator wrote: ↑Tue May 24, 2022 8:49 amGreat point. If you look at some of the EMs they’re thinly traded. Any recommendations for a small cap intl?burritoLover wrote: ↑Tue May 24, 2022 8:36 am Small cap value is arguably a better tilt within international - although small cap EM is a bit tricky to invest in (low volume ETFs).
Vanguard VSS
You might want to join Rational Reminder forum and read over there, will be a stronger contingent of small international and ISCV supporters over there.
DISV from DFA
DFEV from DFA
Re: International: anyone tilt emerging or small cap?
I have a 60/40 portfolio with stock broken down as 50% US and 10% international
My international is all ISCF which is mid/small cap by Morningstar's definitions. I hold no EM (anymore).
Cheers.
My international is all ISCF which is mid/small cap by Morningstar's definitions. I hold no EM (anymore).
Cheers.
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Re: International: anyone tilt emerging or small cap?
Paging Nathan Drake.
Re: International: anyone tilt emerging or small cap?
32% of my total portfolio allocation is international which consists of:
12% Intl Developed LCV (FNDF/PXF)
12% Intl Developed SCV (FNDC/PDN)
4% EM LCB (VWO/IEMG)
4% EM SCB/SCV (EEMS/DGS)
Edit: Emerging market small cap value (DGS) is significantly ahead of total market (VWO) YTD. The diversification to SCV helped in this drawdown.
12% Intl Developed LCV (FNDF/PXF)
12% Intl Developed SCV (FNDC/PDN)
4% EM LCB (VWO/IEMG)
4% EM SCB/SCV (EEMS/DGS)
Edit: Emerging market small cap value (DGS) is significantly ahead of total market (VWO) YTD. The diversification to SCV helped in this drawdown.
"Take a simple idea and take it seriously" ~ Charlie Munger
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Re: International: anyone tilt emerging or small cap?
Concentrated factor exposure with DFA’s experience behind it? What’s not to love?NYCaviator wrote: ↑Tue May 24, 2022 6:49 pmI've been eyeing some of the new DFA ETFs. These look pretty good.donaldfair71 wrote: ↑Tue May 24, 2022 9:23 amI will hop in after these wonderful recommendations and throw in:quietseas wrote: ↑Tue May 24, 2022 8:50 amAvantis AVDV/AVESNYCaviator wrote: ↑Tue May 24, 2022 8:49 amGreat point. If you look at some of the EMs they’re thinly traded. Any recommendations for a small cap intl?burritoLover wrote: ↑Tue May 24, 2022 8:36 am Small cap value is arguably a better tilt within international - although small cap EM is a bit tricky to invest in (low volume ETFs).
Vanguard VSS
You might want to join Rational Reminder forum and read over there, will be a stronger contingent of small international and ISCV supporters over there.
DISV from DFA
DFEV from DFA
I don’t presently tilt, but if I did, I’d be in the DFA/Avantis camp more than any other. If for no other reason than bang for your buck.
Re: International: anyone tilt emerging or small cap?
I do overweight emerging markets because I expect more diversification, and I overweight international small-cap (with Vanguard's VSS) and value (with iShares' IVLU and Avantis' AVDV) in international just as I do in US.
I don't overweight factors quite as much in international as I do in US, because there is more of a cost difference. In the US, I can use Vanguard's VFVA for my value overweight. In international, the non-Vanguard funds are more expensive, and Vanguard's emerging markets and small-cap funds, which I hold in my taxable account, have been less tax-efficient.
I don't overweight factors quite as much in international as I do in US, because there is more of a cost difference. In the US, I can use Vanguard's VFVA for my value overweight. In international, the non-Vanguard funds are more expensive, and Vanguard's emerging markets and small-cap funds, which I hold in my taxable account, have been less tax-efficient.
Re: International: anyone tilt emerging or small cap?
I have a slight tilt. EWX (S&P Emerging Markets Small Cap ETF), VEMAX (Vanguard Emerging Markets Stock Index Fund), and ISCF (iShares MSCI Intl Small-Cap Multifactor)
Re: International: anyone tilt emerging or small cap?
I don’t use international funds or small cap. Not necessary in my opinion.
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Re: International: anyone tilt emerging or small cap?
I read up on AVDV and really like it. ER is low enough to stomach and I like the way they invest. $1.6B in assets, but only average of 217k in average trading volume. Is that anything to worry about? This would be a buy and hold investment for my taxable account.grabiner wrote: ↑Tue May 24, 2022 8:48 pm I do overweight emerging markets because I expect more diversification, and I overweight international small-cap (with Vanguard's VSS) and value (with iShares' IVLU and Avantis' AVDV) in international just as I do in US.
I don't overweight factors quite as much in international as I do in US, because there is more of a cost difference. In the US, I can use Vanguard's VFVA for my value overweight. In international, the non-Vanguard funds are more expensive, and Vanguard's emerging markets and small-cap funds, which I hold in my taxable account, have been less tax-efficient.
Re: International: anyone tilt emerging or small cap?
For a buy-and-hold investment, low volume isn't that important. ETF.com says that it trades at a 0.12% spread. Therefore, if you buy it now at the ask, and sell it 12 years from now at the bid, you will earn 0.12% less than the fund does, an additional annualized cost of 0.01%.NYCaviator wrote: ↑Wed May 25, 2022 7:01 amI read up on AVDV and really like it. ER is low enough to stomach and I like the way they invest. $1.6B in assets, but only average of 217k in average trading volume. Is that anything to worry about? This would be a buy and hold investment for my taxable account.grabiner wrote: ↑Tue May 24, 2022 8:48 pm I do overweight emerging markets because I expect more diversification, and I overweight international small-cap (with Vanguard's VSS) and value (with iShares' IVLU and Avantis' AVDV) in international just as I do in US.
I don't overweight factors quite as much in international as I do in US, because there is more of a cost difference. In the US, I can use Vanguard's VFVA for my value overweight. In international, the non-Vanguard funds are more expensive, and Vanguard's emerging markets and small-cap funds, which I hold in my taxable account, have been less tax-efficient.
And it appears to be fine for a taxable account; 2021 tax costs for value ETFs says that it has been tax-efficient because of its low yield.
Re: International: anyone tilt emerging or small cap?
1/3 of my stocks are International.NYCaviator wrote: ↑Wed May 25, 2022 7:01 am I read up on AVDV and really like it. ER is low enough to stomach and I like the way they invest. $1.6B in assets, but only average of 217k in average trading volume. Is that anything to worry about? This would be a buy and hold investment for my taxable account.
1/3 of my International stocks are in AVDV.
I have been cautious with trades, limiting each purchase lot to a few hundred shares, but haven't had any significant trouble with bid-ask spreads or poor liquidity.
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Re: International: anyone tilt emerging or small cap?
I used a slightly modified Merriman portfolio, so 10 percent emerging and 15 percent Vanguard ex-US small cap. Overall international is 45 percent using only Vanguard Mutual funds. I'm not sure if I'd do all this if I started out today, but it's what I've been using so staying the course. I doubt it makes a big difference but occasionally it's psychologically soothing ("Ooh, at least I am not overweight US tech stocks...") and annually rebalancing is slightly more interesting.
I'm not smart enough to know, and I can't afford to guess.
Re: International: anyone tilt emerging or small cap?
I had this type of thinking / portfolio setup in the past. Since I discovered this forum, I have come to believe this type of tinkering within ones portfolio is most often simply is not worth the effort for some of the reasons already given (not likely to make an appreciable difference) and have a greater appreciation for simplicity in ones portfolio.
The desire to "optimize" ones portfolio is a very strong one which similarly satisfies the inherent need many people have to "do something" vs being satisfied with a portfolio that is 'good enough' and simply stay the course...the cycle continues.
Best wishes.
The desire to "optimize" ones portfolio is a very strong one which similarly satisfies the inherent need many people have to "do something" vs being satisfied with a portfolio that is 'good enough' and simply stay the course...the cycle continues.
Best wishes.
Re: International: anyone tilt emerging or small cap?
I will admit that the more time that passes, the more I realize the most important thing is luck (how good are the markets overall during your investing years).invest4 wrote: ↑Wed May 25, 2022 10:17 am I had this type of thinking / portfolio setup in the past. Since I discovered this forum, I have come to believe this type of tinkering within ones portfolio is most often simply is not worth the effort for some of the reasons already given (not likely to make an appreciable difference) and have a greater appreciation for simplicity in ones portfolio.
The desire to "optimize" ones portfolio is a very strong one which similarly satisfies the inherent need many people have to "do something" vs being satisfied with a portfolio that is 'good enough' and simply stay the course...the cycle continues.
Best wishes.
I hope I put myself in a slightly better position with tilting to small-cap value, but luck is going to be the dominant factor in my final portfolio value and retirement spending levels, I think
Crom laughs at your Four Winds
Re: International: anyone tilt emerging or small cap?
What are the current thoughts on FNDC?
It’s currently more valuey than it used to be, which is interesting.
I’m considering abandoning it in favor of consolidating into AVDV, but currently don’t mind holding both, especially since the holdings are somewhat different and expense ratios are the same
It’s currently more valuey than it used to be, which is interesting.
I’m considering abandoning it in favor of consolidating into AVDV, but currently don’t mind holding both, especially since the holdings are somewhat different and expense ratios are the same
Crom laughs at your Four Winds
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Re: International: anyone tilt emerging or small cap?
By what metric? They have a large overlap and PDN seems less valuey than FNDC and also is more correlated to the US market than AVDV is.richard.h.gao wrote: ↑Wed May 25, 2022 9:45 pmI dumped all my holdings in FNDC for PDN. It's better diversified.
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Re: International: anyone tilt emerging or small cap?
Weightings in the top holdings.muffins14 wrote: ↑Wed May 25, 2022 9:50 pmBy what metric? They have a large overlap and PDN seems less valuey than FNDC and also is more correlated to the US market than AVDV is.richard.h.gao wrote: ↑Wed May 25, 2022 9:45 pmI dumped all my holdings in FNDC for PDN. It's better diversified.
Schwab also charges you $25 to transfer your assets out, per asset, in addition to a $50 transfer fee. I'm never going back to Schwab nor will I ever buy any Schwab ETFs or mutual funds.
Re: International: anyone tilt emerging or small cap?
No fees for buying or selling or transferring ETFs at fidelity. I thought all brokers were like that now for ETFsrichard.h.gao wrote: ↑Wed May 25, 2022 9:59 pm
Schwab also charges you $25 to transfer your assets out, per asset, in addition to a $50 transfer fee. I'm never going back to Schwab nor will I ever buy any Schwab ETFs or mutual funds.
Crom laughs at your Four Winds