International stocks etf

[freedom2022]

Most international stocks etf weight heavily on Japan's big corporations.
It is understandable since Japan is number 3 in the world GDP.
However, Japan's economy has been stagnant for a couple decades.

I come to think it is better to own country based etf such as EWG,
iShares MSCI Germany ETF.

Any thoughts? Thanks in advance.

 

[OverThinkMuch]

Although I've never done it, you could divide up the world by region. Along those lines, you could use "Franklin FTSE Asia ex Japan ETF" which charges 0.19% expense ratio.
https://etfdb.com/etf/FLAX/#charts

I also found an easier approach: invest in developed markets ex-Japan separately from emerging markets. The following shows the countries in that ETF - with Japan missing.
https://etfdb.com/etf/KOKU/#etf-ticker-profile

 

[Lsbcal]

I don't currently have an international fund because US stocks have been better on a trend basis. However, when I do it is in one of:

1. VINEX - small cap international
2. VEU - large cap international

Both have fair slices of the Japan market. Usually VINEX (active fund, SCZ etf could be substitute) beats VEU so that is my priority choice. I don't try to pick based on countries. I notice that right now VINEX has very little exposure to China whereas VEU has 9.5%.

My observation is that small cap international has been better then large cap international and less volatile then EM over the last 25 years.

 

[chassis]

What about holding US equities with global currency and economy exposure? No fund expense. Many household names to choose from.

 

[MichaelB]

Most international stocks etf weight heavily on Japan's big corporations.
It is understandable since Japan is number 3 in the world GDP.
However, Japan's economy has been stagnant for a couple decades.

I come to think it is better to own country based etf such as EWG,
iShares MSCI Germany ETF.

Any thoughts? Thanks in advance.

Vanguard has an ETF for Europe, VGK. That gets you about 95% of the non-US developed country markets minus Japan.

 

[freedom2022]

European Central Bank isn’t expected to raise rates until the second half of 2023. For diversification, VGK is a good bet. I understand Ukraine situation may affect Europe. But, can't think too much.

 

[matjung]

In my perception most international ETF have a big weight on US stocks
The MSCI World Index covers about 20 countries with a US share of 70%.
https://www.justetf.com/en/how-to/msci-world-etfs.html
Personally I think it is best to distribute money based on sectors and not on countries.
In many investment periods ETF on US Stocks performs better than any European Country ETF.
This year, we may experience an exception. But not a big exception.
It is unlikely that US goes down 10% while Europe goes up 10%.
For the moment the iShares MSCI Europe Financials ETF is doing well.

 

[nwsteve]

Similar to approach as US stocks--IQIN Total S & P INTL no US a bit of Canada, 57% Europe
Beats VEU on last yr, 15.4 vs 8.3% and trails VEU by 1% on 3 yr

 

[chassis]

Who here thinks Europe is a low growth economy with less capitalistic culture than the US market?

 

[Markola]

I don’t think it’s a problem. Vanguard Total International Stock Index (VTIAX) has 15.3% exposure to Japan. Our VTIAX allocation is 19% of our portfolio, which works out to 2.9% exposure to a country with companies like Honda and Toyota. Fine with me.

 

[Sunset]

Why does Vanguard VTIAX charge 0.11% while their ETF VXUS charges 0.08% ?

In an IRA, is there any advantage to the VTIAX over the VXUS to justify the extra cost (which amounts to $71 per year on each $100K of investment).

 

[sengsational]

Although I've never done it, you could divide up the world by region. Along those lines, you could use "Franklin FTSE Asia ex Japan ETF" which charges 0.19% expense ratio.
https://etfdb.com/etf/FLAX/#charts

It doesn't matter in the long run too much, but the Franklin ETF's, with their lower expense ratios do tend to trade much more lightly than iShares, and as such, have a bigger spread. If you're not in a hurry, you can make it work, but looking at the iNAV's vs price, sometimes it could cost you more when you buy or sell.

 

[matjung]

I think an international stocks etf should include some stocks from Brazil
This year they have government elections.
In January, the bovespa outperformed most other countries.
https://money.cnn.com/data/world_markets/bovespa/

 

[Out-to-Lunch]

I think an international stocks etf should include some stocks from Brazil
This year they have government elections.
In January, the bovespa outperformed most other countries.
https://money.cnn.com/data/world_markets/bovespa/

VFWAX and VTIAX hold Brazil at market weight (1.3% ex-US). Or did you mean that you prefer to make a bigger-than-market-weight bet on Brazil?

 

[freedom2022]

Looks like you are talking about EWZ, Ishares Msci Brazil ETF.
Personally, I'd rather own emerging markets etf.

 

[matjung]

VFWAX and VTIAX hold Brazil at market weight (1.3% ex-US). Or did you mean that you prefer to make a bigger-than-market-weight bet on Brazil?

Yep, I would allocate more money to Brazil than 1.3%
https://institutional.vanguard.com/iippdf/pdfs/FS570.pdf
Brazil is much bigger than Switzerland or France.
France and Germany are bigger than Switzerland.
I've no idea what country and sector composition the benchmark uses.
I'm neither impressed by the 10 years fund performance nor by the performance of its benchmark.
I think it allocated too much money into Japan and also into Financials.
From the top 10 holdings, three are located in Switzerland.
I think US domestic and US domiciled investors are better of with S&P 500 ETF.
p.s.
I'm also located in Switzerland.
It is certainly a great country. But from the viewpoint of an international investor I would not have 3 of the top 10 positions in this low growth country. I understand that the benchmark contains both Roche and Novartis. But the fund manager should be brave enough to decide which of both pharmaceuticals will perform better.
The fund manager allocated 10% of the fund to 10 companies.
And 90% of the fund to 2190 companies.
The manager picked the wrong 10 titles.

 

[Bryan Barnfellow]

Companies like Nestle, Roche, and Novartis are domiciled in Switzerland, but certainly don't earn much of their annual revenue from its 8.6M people. The revenue comes from the rest of the world--its growth rate is not tied to that of strictly Swiss home-based companies.

-BB

 

[matjung]

Companies like Nestle, Roche, and Novartis are domiciled in Switzerland, but certainly don't earn much of their annual revenue from its 8.6M people. The revenue comes from the rest of the world--its growth rate is not tied to that of strictly Swiss home-based companies.

-BB

I see your point.
But out of the 2200 companies I still would not pick those three as top position.
There are better global players in CH, EMEA and APAC around then those three.

 

[Out-to-Lunch]

I see your point.
But out of the 2200 companies I still would not pick those three as top position.
There are better global players in CH, EMEA and APAC around then those three.

These are passive index funds. Those three companies were not "picked" by the fund as their top holdings. They just reflect the market weight.

This is the "Active Investing" forum, so we are not allowed to discuss whether that is the correct approach or not, but that is how those positions came to be chosen.