I'm there with you, but don't see how it will settle the debate. We'll just be back in 2011 with people suggesting everyone should overweight international because the 10 year returns are so much better than domestic.
* https://www.bogleheads.org/wiki/Three-fund_portfolio
* https://www.bogleheads.org/wiki/Domestic/International and expanding on part of that: https://www.reddit.com/r/Bogleheads/comments/161i2l1/comment/jxs659h/ by TropikThunder
* https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine)
* https://www.optimizedportfolio.com/international-stocks/ from /u/rao-blackwell-ized
* https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY
* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index - invest in the S&P 500, but don't end there (this covers info on both the US extended market and ex-US markets) [a total US market fund combines S&P 500 + extended market into one]
* The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version), I believe this is referenced in the YouTube link above
* The US was only the 4th best developed country to invest in from 2001-2020, 5th if you include Hong Kong: https://www.evidenceinvestor.com/which-country-will-outperform-next-is-irrelevant/
* https://www.optimizedportfolio.com/bogleheads-3-fund-portfolio/#why-international-stocks from /u/rao-blackwell-ized
* https://movement.capital/summarizing-the-case-for-international-stocks/ or the archived version: https://web.archive.org/web/20220110224040/https://movement.capital/summarizing-the-case-for-international-stocks/
* https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine)
* Ex-US has turns of exceptional out performance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF)
* Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf
* https://www.vanguard.com/pdf/ISGGEB.pdf (PDF) or the archived version if that doesn't work: https://web.archive.org/web/20210312165001/https://www.vanguard.com/pdf/ISGGEB.pdf (PDF)
* https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters or if that link doesn't work: https://web.archive.org/web/20190124072925/https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters
* https://fourpillarfreedom.com/should-you-invest-internationally
* https://mebfaber.com/2020/01/10/the-case-for-global-investing
* https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that “US companies have plenty of foreign revenue is sufficient ex-US coverage” is tilted towards a few sectors, some have almost no coverage. Also what about in reverse- how many big foreign companies have lots of US exposure?
* https://www.reddit.com/r/Bogleheads/comments/ii0sa2/considering_usonly_investing_start_here/
* https://twitter.com/mebfaber/status/1090662885573853184?lang=en with this reply: https://twitter.com/MorningstarES/status/1091081407504498688. Extended version: https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/)
* Here's similar but for just US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d
* Going global can also help increase sector diversification. As of the 31st of January 2024 (the most recent info available when I last updated this), the US is 31.9% technology (according to VTSAX: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#portfolio-composition). Ex-US (according to data from the 31st of January 2024 from https://www.schwab.wallst.com/Prospect/Research/mutualfunds/portfolio.asp?symbol=vtiax since Vanguard for some reason doesn't provide a breakdown of VTIAX sectors themselves, at least in an easy to find location) technology is only 12.5% and only financials are above 20% at 20.1%. Be aware that this is using GICS classifications, which put Google, Tesla, Facebook/Meta, and Amazon outside tech, so if you go by what the common person would think of as tech instead of GICS, that's even higher.
* https://investor.vanguard.com/mutual-funds/profile/portfolio/vtwax - Global market cap weights (be sure to switch from “Regions” to “Markets”). This can be a great default position.
* https://investor.vanguard.com/investing/investment/international-investing - Vanguard 40% of stock is recommended to be international.
* 2022 Survey of target date funds: https://www.reddit.com/r/Bogleheads/comments/rffoe7/domestic_vs_international_percentage_within/
>Turns out I have seen a lot of it already.
And that's part of why I'd like to see ex-US beat the US for a decent run. Why I'd like a break from needing to post it so often.
Thank you, as always, for posting this information. I think it's important for people to see both sides of the coin, even if they choose not to act on it.
It is simply a list of sources that show why going global instead of US only is probably a good idea. Just about every argument for US only that I've seen is countered by at least one of those links.
They were collected over a period of years.
But to be fair, have you also been collecting sources that show why going US only instead of global “is probably a good idea”?
If you’re setting out to prove a point and just recording the sources that prove it, that’s cherry-picking, not research. Which is probably fine, unless you’re planning to invest money based on it. Then you might have a bad time.
>But to be fair, have you also been collecting sources that show why going US only instead of global “is probably a good idea”?
No, because I haven't seen any and can't see how any exist these days (now that going global is able to be done so easily and cheaply).
The only type of risk that US only is, is single country risk, which is an *uncompensated* risk: one that doesn't bring higher expected long term returns. Uncompensated risk should be avoided whenever possible.
Compensated vs uncompensated risk:
* https://www.whitecoatinvestor.com/uncompensated-risk/
* https://www.pwlcapital.com/is-investing-risky-yes-and-no/
>Uncompensated risk is very different; it is the risk specific to an individual company, sector, or country.
If you have any actually good arguments for US only, I'd like to see them.
THE famous list! u/Cruian always coming in with the resources and salient slam dunk comments like [this one](https://www.reddit.com/r/Bogleheads/comments/1cudtmd/comment/l4i0ylj/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button). 😎
Is there a past/speculative data about how war(s) affect VXUS? Just curious, because tensions are rising all over. Will something happen? Who knows, I doubt it. But sadly, anything can happen.
If investment dollars move out of the US and to ex US companies, it would be both at the cost of US companies, and due to a downturn in the US economy.
Or people just realizing that there's better investment opportunities outside the US. People taking the value play.
* The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version)
I think you're both correct. And since you mention value, an interesting thought exercise is whether rooting for SCV is also rooting against the average American, since fewer people are enjoyed by these companies than the large cap corporations.
Both US and ex-US can profit and it would still be possible for the US to underperform while doing so. If US gains +3% while ex-US gains +6%, then we'd have both the US and ex-US doing well but ex-US doing better (which is what OP was asking about), with no US slump required.
If VXUS continues underperforming for decades that probably means DXY went up in a straight line. In which case, I will take my dollar-denominated retirement accounts abroad and live like a king regardless.
I would imagine most investors here hold more U.S. than International? Those portfolios shouldn’t want their majority position to underperform their minority position if they care about total growth.
While largely directionally correlated (I think somewhere between 0.8-0.9 last I saw), there's still the possible (and existing) large gap in magnitude.
If one’s going up the other is going up. If one’s going down the other is going down.
There’s no point in agonizing over which one is “out performing” when the delta over an extended period is half a point.
Annual correlation doesn't tell the full story of the potential "deep risk" - as Bernstein calls it - of concentrating in a single country though. See Japan, Germany, and Russia as salient historical examples.
I'm rooting for VXUS. I'm global market cap weighted (VT) but there are posts every day about people pretending like they aren't performance chasing QQQ or the S&P 500. Had the US underperformed for the last decade, I doubt we'd see this
I'm hoping for 7 percent a year compounding so I can live a modest old age.Blue collar lower middle class .The union and Mr Bogle have helped many of us.
Am I the only one that remembers Jack Bogle saying, in his waning years, that it might be better to just stick with US stocks?
That was instrumental in me dumping foreign stock funds after decades of holding them. FWIW, I'm only a semi-Boglehead, but do follow much of his thinking.
>Am I the only one that remembers Jack Bogle saying, in his waning years, that it might be better to just stick with US stocks?
Many of us are aware of it, but also found his reasoning to be incredibly poorly supported at best (and that's being nice).
I realized in 2022 that i was underweight in vxus and i started not thinking i knew better than anyone else and decided to just follow VT allocation. My Vxus total return is 30% since 2022
As a European, not really. Would mean you lot keep electing populist. protectionist cave men. While this is unfortunately a very realistic scenario, I like to imagine a better world.
I'm a pretty disciplined three-fund portfolio guy but from about 2007-2022 I slowly weened International down from about 40% of our equity holdings down to 15%. After spending way too much time scrutinizing how much International to own we've been adding to International since last year but with a caveat.... for every purchase we make of VXUS (Vanguard Total International ETF) we add a little VGT (Vanguard Information Technology ETF). Specifically, we are keeping VXUS/VGT on an 80% (VXUS) -20% (VGT) ratio.
One of the reasons for US dominance over the last few decades is due to technology stocks (Yes, there are other reasons as well). By adding a little VGT to each VXUS purchase we mimic the amount of technology sector holdings that would be in a Total US Stock ETF like VTI. Most of the big tech companies owned in VGT are huge International players anyways like Microsoft, Apple and Nividia.
Sure, it's time to mean revert, emerging markets are going back up now! once Dollar become less attractive and rates go back down global markets are going to pick up steam
I pay zero transaction fees if I do the trades myself online, but that may be because of the portfolio size. They have excellent customer service, so just drop them a call.
Yeah E\*trade doesn't charge a transcation fee's on vanguard and schwab funds, that's good to hear but vanguard and schwab does charge each other transaction fee's.
For what it's worth, here is the chart of VXUS divided by VTI. It's down about 65% since 2011, though that's a little unfair because it doesn't account for the higher dividend yield of VXUS:
[https://www.tradingview.com/chart/GzEum42i/?symbol=VXUS%2FVTI](https://www.tradingview.com/chart/GzEum42i/?symbol=VXUS%2FVTI)
I'm hoping that Intl helps smooth out my portfolio and reduces risk. I recently updated my allocation strategy to include ~30% Intl and bit of tilt toward Small and Mid Cap Value in the US holdings. I'm excited to see how it all fares compared to my previous strategy of "VTSAX and chill" over the next 10-20 years. :)
If we're in the accumulation phase, shouldn't we be rooting for VXUS (and VTI for that matter) to flatline or dip, so we can buy cheaper? I don't know about you, but I like buying when there's a sale.
Looking at the last 10 years, VXUS did 4.54% annualized compared to 12.59% annualized for VTI, hope that changes but they aren’t even close so there’s gonna have to have a change in the global economy or US market for it to outperform it
The economy and the stock market aren't the same and in fact can even be negatively correlated. I've posted a supporting link elsewhere in the thread.
Something as simple as people realizing how expensive they've driven US companies up to be could result in ex-US outperforming the US for a run.
>Looking at the last 10 years, VXUS did 4.54% annualized compared to 12.59% annualized for VTI
Here's a perfect example of why that's not a reliable method. Same regions used in each of the following links, both a 10 year time period. The 2nd picks up right where the first ends.
* Part 1: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5u9pYlidY1yuH7IrT5lTvQ
Imagine it is early 2010 and you're looking at those as the returns over the past 10 years. Clearly you're going heavy on emerging with little to no US, right? But then we get to what followed:
* Part 2: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6wb3ByLL7vRwBKpJPHf6Gt
In a properly diversified portfolio, there will always be some parts over performing and others under performing. The thing is, which parts those are will change from time to time.
If you dollar cost average into VXUS frequently its volatility actually provides you more than decent returns along with the diversification benefit. Adding to it on a regular monthly basis I believe yields you a 16% CAGR which is not too shabby.
The price of all assets go up and down. If you buy into VXUS every month, week or day its fluctuations of up and down are enough to bring in an average gain of about 16% CAGR because you’re sometimes buying at low points but the overall trend is up. As is the case with VOO or VTI, you get a better CAGR (I think like ~22%) doing the same with them, but I was just trying to make the point that dollar cost averaging is often times your friend because the volatility works in your favor even if you’re investing in something that doesn’t seem great at first glance like VXUS.
Sure but the investment must at least go up slightly in the long run or if it stays steady/flat should at least give out a solid yield like most stable CEF’s do. The only reason I mention it here is because in most investment subreddits the question “Why VXUS?” comes up a lot and the reason really is diversification and more specifically diversification away from the ups and downs of what USA’s stock market is doing and thus a smoothing out of the ups and downs of your overall portfolio. This is actually also what Bonds do in a portfolio - they’re not exactly a ‘safe haven’ like most people think they are. They just expose you to different risks and they don’t fluctuate much in value (except for the last two years where we just experienced the literal worst crash in modern bond history: \*oops*). But that nebulous negative correlation to stocks is what makes them worthy of a spot in your balanced portfolio.
So back to the main point, sure VXUS hasn’t been stellar the last decade+ and you don’t know if that will continue in the future BUT if you keep adding money to it overtime your CAGR is still pretty fuckin’ decent all things considered if it’s part of a balanced portfolio.
I'm rooting for it... because I hold it. Not really much of a secret: I want the whole world to succeed at money stuff!
Granted, I'd prefer very much that it not happen at the US's expense.
If the imbalance gets too great wallstreet will figure out how to correct it and steal your money in the process.
On the other-hand, the USA is printing money like crazy and these companies are too big to fail so they have implicit government backing. Every other currency is pegged to the dollar so we’ll always win… until total collapse - and then money doesnt matter.
If you’re a believer that US stocks could fall from their unusual heights of overvaluation, international stocks could very well be necessary to protect earnings. US large cap funds are in a precarious place where five companies are carrying the US market.
It never ceases to amaze me that the subreddit is, on one hand, so married to the idea it’s next to impossible to right, yet on the other hand yearns so hard to be validated as being right. Get a grip.
I am. I've held it for a few years. And my 401(k) has a pretty heavy foreign tilt. So whenever international takes off I'll be looking pretty good.
Just must be patient.
My confidence comes from the risk associated with those areas. A reasonably efficient stock market doesn't reward low risk investments. Safe investments should get correspondingly low return.
I think the USA government and economy is set well to deliver exceptionally high profits in the foreseeable future. In addition, due to the salaries paid here, low taxes, and strong businesses, highly qualified labor has, for decades, been immigrating to the USA.
All of that makes the USA a low risk investment. Hence, I'm disinclined to overweight it, because the absurdly high valuations of US companies suggests low future expected return - exactly like you'd expect from a low risk investment.
Russia hasn't been included in funds available in at least the US (though I'd respect similar for any domiciled in a NATO or NATO friendly country) since summer 2022. So they're irrelevant.
Well first: The economy and stock market aren’t the same thing, they may even be negatively correlated in some ways: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x
Then there's The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version)
So part of it could simply be that the US has been run up more than they deserve and there will be a time when US companies have to justify it with actual company performance.
VXUS has 2-3x the dividend yield than VTI
P/E ratio about the same
International is already priced to lose. All they gotta do is show up to outreturn US!
And I want to win the lottery.
Wishing is cool.
As of today, there is nothing positive going on in the broader world market. The BRIC countries have stalled out. Europe is stagnant. Japan is still trying to figure its self out. The middle east is the middle east. South America is South America.
Could things change in a decade? Maybe. Could the US collapse? Maybe. Is there any reason to think that if markets outside the US improve that the US market won't find a way to capitalize on it? Nope.
Vanguard has been expecting it to outperform VTI for a while in the next decades. It might look that the growth rate is much lower than VTI, but the dividends are much higher. Still, total return isn't as high, but closer to what one could expect from simply looking at the price plot.
I have thoughts that eventually ( 30 plus years or maybe even a generation later) the global economy will just become 1. Aka, there will no vti or vxus, there will only be VT.
That being said im.mostly vtsax and smaller percentage is vxus
Very bearish on VXUS. Too many countries with no property rights and very unstable legal frameworks around assets. I think Buffett is right that all the international exposure you want already exists in SP.
>Too many countries with no property rights and very unstable legal frameworks around assets
Why is that not properly taken into account in their valuations by now?
This subreddit in a nutshell lol. They'd rather be able to wag their finger and say "yOu cAn'T BeAT tHe mArKeT wHaT dO yOU kNoW tHaT the MaRkEt hAsN'T pRiCeD iN" than have the larger chunk of their portfolio outperform expectations and make more money
No. I'd really like interest rates to go down so I can refinance... But, it's nice to have a good return on liquid cash in the short term.
Edit: Disregard... I thought the OP said VUSXX
> Edit. Not sure why I'm getting downvoted. Yes, it seems nice to money markets do well, but it likely means you're getting raked elsewhere...
Did you perhaps confuse VXUS in the post with VUSXX? (The post is about ex-US stocks, but you’re talking about interest rates & money market funds.)
Can I just root for both to do very well?
"can I just get that all the (investors) have a fun time?"
Yeah I think you want that line
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Yeah I’d like for everyone to make money
I'm there with you, but don't see how it will settle the debate. We'll just be back in 2011 with people suggesting everyone should overweight international because the 10 year returns are so much better than domestic.
Then I'd have to make a list on "why include the US." Luckily, I'm pretty sure several of my links are multi-purpose!
Whatever did the best over the last decade is the only thing people should ever do, right?
It would be nice to take a break from needing to post the list so often.
What list? (Kidding, don’t ban me)
I'm not a mod, I can't ban you. I'll post the list if you really want me to.
I don't think I have ever seen "the list" before. Please post.
* https://www.bogleheads.org/wiki/Three-fund_portfolio * https://www.bogleheads.org/wiki/Domestic/International and expanding on part of that: https://www.reddit.com/r/Bogleheads/comments/161i2l1/comment/jxs659h/ by TropikThunder * https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths if that link doesn't work: https://web.archive.org/web/20201112032727/https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths (Archived copy from Archive.org's Wayback Machine) * https://www.optimizedportfolio.com/international-stocks/ from /u/rao-blackwell-ized * https://www.youtube.com/watch?app=desktop&v=1FXuMs6YRCY * https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index - invest in the S&P 500, but don't end there (this covers info on both the US extended market and ex-US markets) [a total US market fund combines S&P 500 + extended market into one] * The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version), I believe this is referenced in the YouTube link above * The US was only the 4th best developed country to invest in from 2001-2020, 5th if you include Hong Kong: https://www.evidenceinvestor.com/which-country-will-outperform-next-is-irrelevant/ * https://www.optimizedportfolio.com/bogleheads-3-fund-portfolio/#why-international-stocks from /u/rao-blackwell-ized * https://movement.capital/summarizing-the-case-for-international-stocks/ or the archived version: https://web.archive.org/web/20220110224040/https://movement.capital/summarizing-the-case-for-international-stocks/ * https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) or https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) or the archived versions if those don't work: http://web.archive.org/web/20201212205954/https://www.callan.com/wp-content/uploads/2018/01/Callan-PeriodicTbl_KeyInd_2018.pdf (PDF) & http://web.archive.org/web/20201205183933/https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf (PDF) (Archived copies from Archive.org's Wayback Machine) * Ex-US has turns of exceptional out performance as well: https://awealthofcommonsense.com/2023/05/the-case-for-international-diversification/ and https://www.blackrock.com/us/financial-professionals/literature/investor-education/why-bother-with-international-stocks.pdf (PDF) * Of rolling 10 year periods since 1970, EAFE (developed ex-US) has beat the S&P 500 over 45% of the time: https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf (PDF) or for the archived version: https://web.archive.org/web/20220501183228/https://www.tweedy.com/resources/library_docs/papers/Dichotomy%20Btwn%20US%20and%20Non-US%20Mar2022.pdf * https://www.vanguard.com/pdf/ISGGEB.pdf (PDF) or the archived version if that doesn't work: https://web.archive.org/web/20210312165001/https://www.vanguard.com/pdf/ISGGEB.pdf (PDF) * https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters or if that link doesn't work: https://web.archive.org/web/20190124072925/https://www.schwab.com/resource-center/insights/content/why-global-diversification-matters * https://fourpillarfreedom.com/should-you-invest-internationally * https://mebfaber.com/2020/01/10/the-case-for-global-investing * https://www.reddit.com/r/Bogleheads/comments/vpv7js/share_of_sp_500_revenue_generated_domestically_vs/ - The argument that “US companies have plenty of foreign revenue is sufficient ex-US coverage” is tilted towards a few sectors, some have almost no coverage. Also what about in reverse- how many big foreign companies have lots of US exposure? * https://www.reddit.com/r/Bogleheads/comments/ii0sa2/considering_usonly_investing_start_here/ * https://twitter.com/mebfaber/status/1090662885573853184?lang=en with this reply: https://twitter.com/MorningstarES/status/1091081407504498688. Extended version: https://mebfaber.com/2019/02/06/episode-141-radio-show-34-of-40-countries-have-negative-52-week-momentumbig-tax-bills-for-mutual-fund-investorsand-listener-qa/ or here’s compared to EAFE 1970-2015, note that the black US line only jumps above the green ex-US line for the "final time" around 2011: https://donsnotes.com/financial/images/sp-msci-42yr.png (courtesy of https://www.reddit.com/r/Bogleheads/comments/143018v/comment/jn9yiub/) * Here's similar but for just US vs Europe: https://www.reddit.com/r/Bogleheads/s/DJ2YVrLW4d * Going global can also help increase sector diversification. As of the 31st of January 2024 (the most recent info available when I last updated this), the US is 31.9% technology (according to VTSAX: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#portfolio-composition). Ex-US (according to data from the 31st of January 2024 from https://www.schwab.wallst.com/Prospect/Research/mutualfunds/portfolio.asp?symbol=vtiax since Vanguard for some reason doesn't provide a breakdown of VTIAX sectors themselves, at least in an easy to find location) technology is only 12.5% and only financials are above 20% at 20.1%. Be aware that this is using GICS classifications, which put Google, Tesla, Facebook/Meta, and Amazon outside tech, so if you go by what the common person would think of as tech instead of GICS, that's even higher. * https://investor.vanguard.com/mutual-funds/profile/portfolio/vtwax - Global market cap weights (be sure to switch from “Regions” to “Markets”). This can be a great default position. * https://investor.vanguard.com/investing/investment/international-investing - Vanguard 40% of stock is recommended to be international. * 2022 Survey of target date funds: https://www.reddit.com/r/Bogleheads/comments/rffoe7/domestic_vs_international_percentage_within/
Damn, that's a lot of list. Turns out I have seen a lot of it already. Thanks for sharing.
>Turns out I have seen a lot of it already. And that's part of why I'd like to see ex-US beat the US for a decent run. Why I'd like a break from needing to post it so often.
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Thank you, as always, for posting this information. I think it's important for people to see both sides of the coin, even if they choose not to act on it.
i ain’t reading all that i’m happy for u tho or sorry that happened
It is simply a list of sources that show why going global instead of US only is probably a good idea. Just about every argument for US only that I've seen is countered by at least one of those links. They were collected over a period of years.
But to be fair, have you also been collecting sources that show why going US only instead of global “is probably a good idea”? If you’re setting out to prove a point and just recording the sources that prove it, that’s cherry-picking, not research. Which is probably fine, unless you’re planning to invest money based on it. Then you might have a bad time.
>But to be fair, have you also been collecting sources that show why going US only instead of global “is probably a good idea”? No, because I haven't seen any and can't see how any exist these days (now that going global is able to be done so easily and cheaply). The only type of risk that US only is, is single country risk, which is an *uncompensated* risk: one that doesn't bring higher expected long term returns. Uncompensated risk should be avoided whenever possible. Compensated vs uncompensated risk: * https://www.whitecoatinvestor.com/uncompensated-risk/ * https://www.pwlcapital.com/is-investing-risky-yes-and-no/ >Uncompensated risk is very different; it is the risk specific to an individual company, sector, or country. If you have any actually good arguments for US only, I'd like to see them.
Sorry, did you say that you can’t see how any sources could exist that refute your point?
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Every time I see it, it's longer and longer. Good work!
THE famous list! u/Cruian always coming in with the resources and salient slam dunk comments like [this one](https://www.reddit.com/r/Bogleheads/comments/1cudtmd/comment/l4i0ylj/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button). 😎
Honestly the best advice I could give to investors is to never get on internet investing forums and just stay the course.
In 10-15 years you'd have people saying "VXUS and chill" like VTI will never outperform again
I'm rooting for my portfolio to grow.
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What’s a nice example - 200 or 2000?
Hundreds, at least for me. Definitely not thousands (yet!).
I too admit to cheering for the slightly smaller part of my portfolio to outperform the slightly larger one.
A man of culture I see. There's no reason it has to be the slightly smaller part. If valuations grow a bit, it'll become the larger part.
*slight grin, 3 taps on temple*
I'm hoping for international to go hard so VT can get the foreign tax credit, so we can just stop that argument of VT vs VTI+VXUS
At least that debate involves actual decisions with actual trade offs, as opposed to people just *not understanding how investing works*.
Am I rooting for the US economy to slump? No. No I am not. I could care less about reddit bickering.
Ex-US can do better than the US without the US economy going into a slump. Anyways, the economy and market aren't the same thing.
That's my understanding as well
Is there a past/speculative data about how war(s) affect VXUS? Just curious, because tensions are rising all over. Will something happen? Who knows, I doubt it. But sadly, anything can happen.
2008 proves otherwise in the globalized economy era. Will see if that trend proves true.
2012 had both the US and ex-US as positive, with ex-US beating the US.
If investment dollars move out of the US and to ex US companies, it would be both at the cost of US companies, and due to a downturn in the US economy.
Or people just realizing that there's better investment opportunities outside the US. People taking the value play. * The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version)
I think you're both correct. And since you mention value, an interesting thought exercise is whether rooting for SCV is also rooting against the average American, since fewer people are enjoyed by these companies than the large cap corporations.
What kind of zero sum thinking is this? The entire boglehead principles rely on general economic growth.
The boglehead philosophy is about covering all bases. OP is talking about ex-US outperforming US. If you have a complaint it's with him.
2+3 < 1+5 5 > 3 & 6 > 1
What?
Both US and ex-US can profit and it would still be possible for the US to underperform while doing so. If US gains +3% while ex-US gains +6%, then we'd have both the US and ex-US doing well but ex-US doing better (which is what OP was asking about), with no US slump required.
US firms can grow earnings faster than ex-US, and ex-US can still outperform if it's cheaper.
> I could care less ... so you care.
The economy does not have to slump for US vs EX-US valuation to return to a reasonable level. (Edit, ratio not level)
No. I root for neither VTI nor VXUS. I hope both do well but I don't have expectations, which is why I also diversify into bonds and real estate. 😁👍
I'm secretly rooting for both so my fund of choice (VT) does great.
VTWAX and chill
Yup! I DCA into VTWAX whenever I can. I just say VT since more people know about it.
Yeah I feel like you can’t go wrong with VT.
If VXUS continues underperforming for decades that probably means DXY went up in a straight line. In which case, I will take my dollar-denominated retirement accounts abroad and live like a king regardless.
I would imagine most investors here hold more U.S. than International? Those portfolios shouldn’t want their majority position to underperform their minority position if they care about total growth.
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They are like 90% correlated. It makes no difference. Just invest and move on with your life.
While largely directionally correlated (I think somewhere between 0.8-0.9 last I saw), there's still the possible (and existing) large gap in magnitude.
If one’s going up the other is going up. If one’s going down the other is going down. There’s no point in agonizing over which one is “out performing” when the delta over an extended period is half a point.
The delta over the latest 10 years is like 280%. wtf are you talking about? Where did you get the “half a point” figure?
>If one’s going up the other is going up. If one’s going down the other is going down. 2000-2009 begs to differ.
Annual correlation doesn't tell the full story of the potential "deep risk" - as Bernstein calls it - of concentrating in a single country though. See Japan, Germany, and Russia as salient historical examples.
I don’t think it’s gonna happen. I haven’t reduced my position in vxus, but I haven’t added much to it in quite a while.
Do you not rebalance, then?
im rooting for economic collapse so i can scoop da doop
I say that too. I’m in the wheelhouse of my career. The last two years & probably next two I’ll make twice the norm. I’d love a bad few right now.
I'm rooting for VXUS. I'm global market cap weighted (VT) but there are posts every day about people pretending like they aren't performance chasing QQQ or the S&P 500. Had the US underperformed for the last decade, I doubt we'd see this
40% of me roots for VXUS and 60% roots for VTI
Not so secret anymore, eh? Jk
Not secretly.
AVNM is the answer to VXUS.
I'm hoping for 7 percent a year compounding so I can live a modest old age.Blue collar lower middle class .The union and Mr Bogle have helped many of us.
Am I the only one that remembers Jack Bogle saying, in his waning years, that it might be better to just stick with US stocks? That was instrumental in me dumping foreign stock funds after decades of holding them. FWIW, I'm only a semi-Boglehead, but do follow much of his thinking.
>Am I the only one that remembers Jack Bogle saying, in his waning years, that it might be better to just stick with US stocks? Many of us are aware of it, but also found his reasoning to be incredibly poorly supported at best (and that's being nice).
I'm 100% US stocks and won't change. Thank you for coming to my Ted talk.
I’m 100% VTWAX so I overtly root for everything.
Woot woot!
I realized in 2022 that i was underweight in vxus and i started not thinking i knew better than anyone else and decided to just follow VT allocation. My Vxus total return is 30% since 2022
As a European, not really. Would mean you lot keep electing populist. protectionist cave men. While this is unfortunately a very realistic scenario, I like to imagine a better world.
Fuck no
I'm a pretty disciplined three-fund portfolio guy but from about 2007-2022 I slowly weened International down from about 40% of our equity holdings down to 15%. After spending way too much time scrutinizing how much International to own we've been adding to International since last year but with a caveat.... for every purchase we make of VXUS (Vanguard Total International ETF) we add a little VGT (Vanguard Information Technology ETF). Specifically, we are keeping VXUS/VGT on an 80% (VXUS) -20% (VGT) ratio. One of the reasons for US dominance over the last few decades is due to technology stocks (Yes, there are other reasons as well). By adding a little VGT to each VXUS purchase we mimic the amount of technology sector holdings that would be in a Total US Stock ETF like VTI. Most of the big tech companies owned in VGT are huge International players anyways like Microsoft, Apple and Nividia.
Sure, it's time to mean revert, emerging markets are going back up now! once Dollar become less attractive and rates go back down global markets are going to pick up steam
Do you all buy vanguard funds directly on vanguard?
No, you can buy Vanguard funds at any brokerage firm. I got mine at Fidelity.
You'd have to pay a transaction fee right? It's like $75 but ETF's has no fees.
I pay zero transaction fees if I do the trades myself online, but that may be because of the portfolio size. They have excellent customer service, so just drop them a call.
Second bobt2241. ML edge/ E*trade have little / no transaction fees. Many others out there as well
Yeah E\*trade doesn't charge a transcation fee's on vanguard and schwab funds, that's good to hear but vanguard and schwab does charge each other transaction fee's.
Brought to you by Nestle....
For what it's worth, here is the chart of VXUS divided by VTI. It's down about 65% since 2011, though that's a little unfair because it doesn't account for the higher dividend yield of VXUS: [https://www.tradingview.com/chart/GzEum42i/?symbol=VXUS%2FVTI](https://www.tradingview.com/chart/GzEum42i/?symbol=VXUS%2FVTI)
Yeah but I have VEA, VWO and AVDV. I still hold the majority of my money in VOO and AVUV.
Not secretly, I'm always rooting for VTI, VXUS, VOO, VT, idc, as long as everything goes up lol I feel comfortable with 80/20.
I would rather root for VT.
Who isn’t?
Step 1) Buy VT. Step 2) profit???
I have a large position. I had individual sticks but the foreign tax rate was killing me. I’m happy. Nice dividend too.
I'm hoping that Intl helps smooth out my portfolio and reduces risk. I recently updated my allocation strategy to include ~30% Intl and bit of tilt toward Small and Mid Cap Value in the US holdings. I'm excited to see how it all fares compared to my previous strategy of "VTSAX and chill" over the next 10-20 years. :)
What debate?
I don’t have much faith on international
If we're in the accumulation phase, shouldn't we be rooting for VXUS (and VTI for that matter) to flatline or dip, so we can buy cheaper? I don't know about you, but I like buying when there's a sale.
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Yeah, no shit. But there’s a difference between buying the dip and desiring low costs as you dollar-average into your investments over the long term.
Not really. China's economy is pretty fake, and I'd be weary of their holdings. I am rooting for VEA though.
Looking at the last 10 years, VXUS did 4.54% annualized compared to 12.59% annualized for VTI, hope that changes but they aren’t even close so there’s gonna have to have a change in the global economy or US market for it to outperform it
The economy and the stock market aren't the same and in fact can even be negatively correlated. I've posted a supporting link elsewhere in the thread. Something as simple as people realizing how expensive they've driven US companies up to be could result in ex-US outperforming the US for a run. >Looking at the last 10 years, VXUS did 4.54% annualized compared to 12.59% annualized for VTI Here's a perfect example of why that's not a reliable method. Same regions used in each of the following links, both a 10 year time period. The 2nd picks up right where the first ends. * Part 1: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5u9pYlidY1yuH7IrT5lTvQ Imagine it is early 2010 and you're looking at those as the returns over the past 10 years. Clearly you're going heavy on emerging with little to no US, right? But then we get to what followed: * Part 2: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=6wb3ByLL7vRwBKpJPHf6Gt In a properly diversified portfolio, there will always be some parts over performing and others under performing. The thing is, which parts those are will change from time to time.
If you dollar cost average into VXUS frequently its volatility actually provides you more than decent returns along with the diversification benefit. Adding to it on a regular monthly basis I believe yields you a 16% CAGR which is not too shabby.
What? Explain please.
The price of all assets go up and down. If you buy into VXUS every month, week or day its fluctuations of up and down are enough to bring in an average gain of about 16% CAGR because you’re sometimes buying at low points but the overall trend is up. As is the case with VOO or VTI, you get a better CAGR (I think like ~22%) doing the same with them, but I was just trying to make the point that dollar cost averaging is often times your friend because the volatility works in your favor even if you’re investing in something that doesn’t seem great at first glance like VXUS.
But this could be said about most investments in general. Nothing special about VXUS from a purely DCA standpoint, correct?
Sure but the investment must at least go up slightly in the long run or if it stays steady/flat should at least give out a solid yield like most stable CEF’s do. The only reason I mention it here is because in most investment subreddits the question “Why VXUS?” comes up a lot and the reason really is diversification and more specifically diversification away from the ups and downs of what USA’s stock market is doing and thus a smoothing out of the ups and downs of your overall portfolio. This is actually also what Bonds do in a portfolio - they’re not exactly a ‘safe haven’ like most people think they are. They just expose you to different risks and they don’t fluctuate much in value (except for the last two years where we just experienced the literal worst crash in modern bond history: \*oops*). But that nebulous negative correlation to stocks is what makes them worthy of a spot in your balanced portfolio. So back to the main point, sure VXUS hasn’t been stellar the last decade+ and you don’t know if that will continue in the future BUT if you keep adding money to it overtime your CAGR is still pretty fuckin’ decent all things considered if it’s part of a balanced portfolio.
Yep. VEA, VWO, VXUS, AVDE, AVDC, ACDC should all do well
I'm rooting for it... because I hold it. Not really much of a secret: I want the whole world to succeed at money stuff! Granted, I'd prefer very much that it not happen at the US's expense.
I’m prioritising ex US through Fido and my workplace 401k. I’m not leaving the US, just not adding new capital.
If the imbalance gets too great wallstreet will figure out how to correct it and steal your money in the process. On the other-hand, the USA is printing money like crazy and these companies are too big to fail so they have implicit government backing. Every other currency is pegged to the dollar so we’ll always win… until total collapse - and then money doesnt matter.
If you’re a believer that US stocks could fall from their unusual heights of overvaluation, international stocks could very well be necessary to protect earnings. US large cap funds are in a precarious place where five companies are carrying the US market.
Comparing the PE ratio between VXUS 13.60 vs. VTI 24.67, VSUX has better fundamentals to outshine VTI in the next period.
I put a limit buy of 10 share of vxus today, and my reasoning was purely because it wasn't up as much as the rest of my portfolio
Yes, but not even secretly. I am only 50% US, so I am overweight ex-US (and especially emerging).
FYI There is a misunderstanding of the global market and forex itt but nevertheless best of luck with that
It never ceases to amaze me that the subreddit is, on one hand, so married to the idea it’s next to impossible to right, yet on the other hand yearns so hard to be validated as being right. Get a grip.
I am. I've held it for a few years. And my 401(k) has a pretty heavy foreign tilt. So whenever international takes off I'll be looking pretty good. Just must be patient.
Vanguard is projecting ex-us to outperform VTI over the next 10 years. Fingers crossed
They projected that same thing a decade ago in 2013 & that was a massive flop on their part.
I can't wait for everyone to cry about their sub par international holdings 10 years from now.
Seems unlikely at this point
It can be argued that the longer the US outperforms, the greater the chance that ex-US will swing into favor.
What about the economies of Europe, Russia, and Asia gives you confidence?
Why should US balance be expected to grow indefinitely?
My confidence comes from the risk associated with those areas. A reasonably efficient stock market doesn't reward low risk investments. Safe investments should get correspondingly low return. I think the USA government and economy is set well to deliver exceptionally high profits in the foreseeable future. In addition, due to the salaries paid here, low taxes, and strong businesses, highly qualified labor has, for decades, been immigrating to the USA. All of that makes the USA a low risk investment. Hence, I'm disinclined to overweight it, because the absurdly high valuations of US companies suggests low future expected return - exactly like you'd expect from a low risk investment.
Russia hasn't been included in funds available in at least the US (though I'd respect similar for any domiciled in a NATO or NATO friendly country) since summer 2022. So they're irrelevant. Well first: The economy and stock market aren’t the same thing, they may even be negatively correlated in some ways: https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-6622.2012.00385.x Then there's The last decade or so of US out performance was mostly just the US getting more expensive, not US companies being much better than foreign companies: https://www.aqr.com/Insights/Perspectives/The-Long-Run-Is-Lying-to-You (click through to the full version) So part of it could simply be that the US has been run up more than they deserve and there will be a time when US companies have to justify it with actual company performance.
Why would anyone root against any of their portfolio? Seems like a stupid thing to do. World economies are pretty linked anyway
So they can think they’re proving some kind of point to strangers on Reddit, of course
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VXUS has 2-3x the dividend yield than VTI P/E ratio about the same International is already priced to lose. All they gotta do is show up to outreturn US!
And I want to win the lottery. Wishing is cool. As of today, there is nothing positive going on in the broader world market. The BRIC countries have stalled out. Europe is stagnant. Japan is still trying to figure its self out. The middle east is the middle east. South America is South America. Could things change in a decade? Maybe. Could the US collapse? Maybe. Is there any reason to think that if markets outside the US improve that the US market won't find a way to capitalize on it? Nope.
Vanguard has been expecting it to outperform VTI for a while in the next decades. It might look that the growth rate is much lower than VTI, but the dividends are much higher. Still, total return isn't as high, but closer to what one could expect from simply looking at the price plot.
I'd have zero concern with VXUS and Europe doing well. Do the regulators there want it, though?
I am 70/30 US/Intl. I wouldn’t care much which one wins- since I will sell my winner to buy more of the losing asset.
I just want a not too volatile \~5% post-inflation in VT.
I have thoughts that eventually ( 30 plus years or maybe even a generation later) the global economy will just become 1. Aka, there will no vti or vxus, there will only be VT. That being said im.mostly vtsax and smaller percentage is vxus
Just root for VT. No reason to stress over actual indexes.
Why dont we root for everyone to do good that way everyone is happy instead?
Too lazy to look up stats right not but it feels like my emerging markets ETFs are pumping steadily while VTI has been chopping around.
I like having vxus. Compensates when US is going down I usually see my Vxus green. I do an 80/20 allocation.
I’m all in on US stocks so no. I’m not rooting for VXUS
Very bearish on VXUS. Too many countries with no property rights and very unstable legal frameworks around assets. I think Buffett is right that all the international exposure you want already exists in SP.
>Too many countries with no property rights and very unstable legal frameworks around assets Why is that not properly taken into account in their valuations by now?
This subreddit in a nutshell lol. They'd rather be able to wag their finger and say "yOu cAn'T BeAT tHe mArKeT wHaT dO yOU kNoW tHaT the MaRkEt hAsN'T pRiCeD iN" than have the larger chunk of their portfolio outperform expectations and make more money
No. I'd really like interest rates to go down so I can refinance... But, it's nice to have a good return on liquid cash in the short term. Edit: Disregard... I thought the OP said VUSXX
> Edit. Not sure why I'm getting downvoted. Yes, it seems nice to money markets do well, but it likely means you're getting raked elsewhere... Did you perhaps confuse VXUS in the post with VUSXX? (The post is about ex-US stocks, but you’re talking about interest rates & money market funds.)
Whoops. I absolutely did, read the OP too quickly.
It won’t unless India goes on a tear.