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What ER is too high for International?
Old 08-12-2009, 01:22 PM   #1
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What ER is too high for International?

What ER is too high for an international fund. We have in our 401k Thornburg International Value R3 with an ER of 1.45%. It has had good returns in the past but I am unsure if that high of an ER is worth it, especially considering my 500 Index fund ER is 0.09% (VIFSX). Any thoughts?

Thanks,

Dave
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Old 08-12-2009, 01:27 PM   #2
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That's too high for me. If you can buy any fund, then compare to what you can buy. It looks like anything above 0.5% is too high. See the "here" links at DFA vs. Vanguard for expense ratios of many worthy funds.

It seems one should always compare to the Vanguard fund in the asset class that you are looking at. VEU has an expense ratio of around 0.2%. So that's another upper limit to shoot for.
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Old 08-12-2009, 04:57 PM   #3
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I agree with LOL. Stick to the VIFSX in your 401k. If you want International buy VEU or its MF equivalent in your IRA or in a taxable account. 1.45% is just too much drag to overcome.

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Old 08-12-2009, 05:54 PM   #4
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Ditto. Is there an echo? Shoot for under 0.5%, since you can get most flavors of international investments for somewhere in the 0.2-0.5% ER range. Maybe go a little higher if you are constrained on the ability to invest in international elsewhere. 1.5% for international vs. 0.1% for SP500 would probably make me be 100% SP500 if those were my only choices since I doubt I could beat the 1.4% expense drag by diversification/rebalancing/risk reduction in international.

I'm stuck with virtually this same choice in my HSA - 1.5% for anything besides SP500, and 0.4% for the SP500 index fund. So I'm 100% SP500 in the HSA, and get my international, small cap, etc. elsewhere in IRA, 401k, taxable, etc.
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Old 08-12-2009, 06:02 PM   #5
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Quote:
Originally Posted by dougie790 View Post
What ER is too high for an international fund. We have in our 401k Thornburg International Value R3 with an ER of 1.45%. It has had good returns in the past but I am unsure if that high of an ER is worth it, especially considering my 500 Index fund ER is 0.09% (VIFSX). Any thoughts?

Thanks,

Dave
I wish we could get ERs like that in Canada! In the US you have the advantage of size. However I expect ERs in the US to rise in the next few years due to tighter securities regulation and reporting requirements.
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Old 08-12-2009, 06:09 PM   #6
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Can you not purchase Vanguard ETFs through a TDWaterhouse.ca brokerage?
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Old 08-12-2009, 06:33 PM   #7
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Yes, see
Investing in Vanguard in Canada

....though I have not personally done so. Most Canadian investors are not aware of ETFs and iShares. But their interest in reducing fees is increasing and the DIY quotient is increasing!
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