International Some Considerations For Investing Globally

Hi @Nodrog

I got all excited when I seen the announcement and run the numbers using the wholesale equivalent. Yay some excitement in the boring world of passive. But alas improvement to existing portfolio balance requires too small a holding to warrant adding another holding.

Given the cost of VISM if I ever increase small exposure I would probably be more inclined to look at IJR, there's enough country diversification in the rest of my portfolio already.

Any inbcreased exposure to small cap for me would probably be accompanied by a corresponding decrease in value factor. Maybe there will be an environment in the future that prompts me to take another look, but in summary, as of today still too negligible.

 

Asia has taken the biggest pounding in this recent market fall followed by emerging markets. Good time to jump in IF you believe in the fundamentals.

 

Thanks @dunno

I agree with your assessment of IJR being preferred if global small cap was of interest on cost in particular. VISM is in large part US anyway but a lot more expensive fee wise.

Thank goodness I have an agreed investment plan with my wife. The enthusiastic investing part of me can’t help but be tempted by some of the new passive ETFs increasingly on offer. But my personal view is that unless we’re prepared to hold a decent stake in an asset class (eg minimum 8 - 10%) then it’s just not going to be meaningful enough to have a noticeable impact on the portfolio.

Of course there’s the correlation aspect that’s often mentioned. But again a meaningful stake is likely needed to truely benefit the portfolio. And we’re very fortunate to have enough wealth to need only live off part of the income so trying to create a zig / zag Portfolio to smooth capital just didn’t seem necessary for us.

So for better or worse VGS (although PMC’s still there as a legacy holding) is it for us as retirees. But after being used to a higher number of holdings previously over my life accepting a simple single holding for International can be quite challenging given my nature and increasing temptation out there. Hence thank goodness for the agreed Investment Policy Statement.

As mentioned numerous times in previous posts International exposure for us is mostly insurance against Home country risk. At this stage and for the foreseeable future VGS (developed only) seems sufficient to meet that objective and importantly cost is very low unlike a number of other sector / niche asset class ETFs where there is the hurdle of higher fees.

Unfortunately though simple does not always equate to easy.

 

IJR has around 600 holdings while VISM > 3000, which may explain some of the fee discrepancy. VISM looks very interesting and adds in to an unmapped part of my current portfolio, but so does IJR.

Small caps are important in my opinion so regardless of how minor the allocation I will be including one of these.

 

@Nodrog - I am curious - what % of your portfolio is international?

 

From memory I think it’s roughly around 18% but goal is to get it to 25%.

 

VAE
Thought I’d post this in the right place.... VAE has a short history (on ASX). It’s down 17% from recent highs - presumably China related (growth, trade war). Possibly also the AUD dropping in value?
I’m interested to buy for long term and wondering if anyone else has thoughts on its current challenges ahead - or any that I don’t know of.
Thanks as always.

 

FYI for those interested, I found the FX exposures of VAE, as I wasn’t sure if it was USD exposed in a roundabout way. No it appears not. Based on a quick check of exchange history I would guess only 1-2% of the last month drop is FX related. Hence the rest must be Chinese jitters...and it’s rather thinly traded I think.

 

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