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Which International fund is less risky?
Old 08-25-2014, 05:19 PM   #1
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Which International fund is less risky?

I am trying to decide which Vanguard International fund is more or less risky:

* VTMGX (Vang Developed Markets Index), or
* VTIAX (Vang Tot Intl Stock)

Of course, Vanguard gives them both a "5" in their "Risk Potential" category, so maybe it's a moot question. Still, here are the other factors I am trying to weigh:

1) Expense ratio: 0.09% vs. 0.14% gives VTMGX an advantage because it's cheaper.

2) Number of stocks: 1369 vs. 5673 gives VTIAX an advantage, because it's more diversified.

3) Taxes: VTMGX used to be called a "tax managed" fund, but they have recently dropped that description, so I'm not sure how to compare these.

4) Countries: VTMGX is [60% Europe, 40% Pacific], while VTIAX is (approx) [45% Europe, 30% Pacific, 18% Emerging Markets, 7% Canada]. Advantage?

This last one is tricky (for me). One might say the VTIAX wins simply because it's more diversified, but it's hard not to "guess" that Europe will stay flat and Emerging Markets won't be flat (up or down?).

5) Other "risk" factors I'm not considering?

I appreciate your thoughts on this.
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Old 08-25-2014, 05:44 PM   #2
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What do you mean by "risky?"

Volitility?

Liklihood of meeting your long range investment goals over time?

Etc.

What are you looking for? Just saying "risky" doesn't cut it.
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Old 08-25-2014, 05:57 PM   #3
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Quote:
Originally Posted by youbet View Post
What do you mean by "risky?"

Volitility?

Liklihood of meeting your long range investment goals over time?

Etc.

What are you looking for? Just saying "risky" doesn't cut it.
All of the above.
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Old 08-25-2014, 06:04 PM   #4
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You can check past drawdowns on morning star and see how they did in p past bears. The one with em is probably slightly more volatile.

Personally I prefer developed markets because I have a separate fund just for em. But I wouldn't hesitate to go with total international eithet

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Old 08-25-2014, 07:24 PM   #5
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This is a very easy question to answer. Which fund has more small-cap stocks and emerging markets stocks? Small-cap stocks are riskier than large-cap stocks that's why there is a "small-cap premium". Emerging markets stocks are riskier than developed market stocks.

OK, I'll let readers figure out which of the OP's two international funds is riskier. That means the other one is less risky and should have a lower expected performance over the long term.
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