Opinion on International or Global Funds

[street]

What is your view or pinion on holdings of Internatinal or Global Funds. I have one investment account that I hold 8 different funds and this coming week I want to change a few of them to different funds. I have always had some shares in international funds and actually have done fairly good.
Do you believe these funds are a value to your investment portfolio or not?

 

[Al18]

They recently posted the 2024 Callan chart. I continue to hold some international (about 7%) for diversification. Callan Periodic Table of Investment Returns: Year-End 2024

 

[Stormy Kromer]

International funds have underperformed my US stock exposure by a significant amount. I bought them for diversification but would have been much, much better off buying a diversified fund such as VG Total Stock Index.

 

[street]

Al18 thanks. I think I will also continue to hold a small share of those funds also. For me also, I like diversification.

 

[MarieIG]

I hold a small percentage of international funds for diversification, but my domestic funds have done much, much better.

I have not re-balanced so the percentage of foreign has declined.

 

[sengsational]

I have had a significant portion of international equities for decades. Almost universally disappointed. My approach, that I got from Marrotta's Freedom Investment idea, was to invest in countries that have the most economic freedom. Just like small stocks, the logic for why these countries should do better is convincing, but the reality is that people check "S&P 500" on their 401k form, and I'm thinking that constant buoyancy is hard to beat.

 

[ncbill]

No, because I don't trust financial reporting from non-US based firms.

GAAP might not be perfect but it's a darn sight better than what other countries require.

 

[street]

No, because I don't trust financial reporting from non-US based firms.

GAAP might not be perfect but it's a darn sight better than what other countries require.

Interesting!!!!

 

[audreyh1]

If I could ditch my international funds without big realized capital gains consequences, I would. I’m heartily sick of the tax hassle of owning them. If they are held in an IRA those tax hassles disappear.

 

[tulak]

I sold all my international last year. US equities are good enough for me.

International was in tax deferred accounts, so it was easy.

 

[Gumby]

After two decades of underperformance, I sold all my international funds in 2019, right after I retired. Domestic US companies have plenty of international exposure.

 

[pb4uski]

No, because I don't trust financial reporting from non-US based firms.

GAAP might not be perfect but it's a darn sight better than what other countries require.

Fair point, but I think it depends on where in the world it is. Asia is definitely more dicey that much of western Europe.

I transitioned away from international equities many years ago due to chronic underperformance.

 

[pjigar]

I used to hold international funds (15%) about 15 years ago. I ditched them at the time. Here were my reasons at the time, in no particular order:
* Global funds tend to have a higher expense ratio so any excess gains may get diluted.
* US companies have significant operations outside US so US companies are participating in the global economy by proxy.
* Lack of transparency/honesty of on-US companies compared to US companies. Yes, there are bad apples everywhere but US is better off.
* Undue currency risk
* Global income taxed at unfavorable rates.
* And for fun, I liked what Warrant Buffet said: "Never bet against America!"

Lately I have added one more philosophical reason:
* Pareto principle suggests that stronger systems get even stronger over time, I don't see any other country being a viable competitor to US companies.

 

[pb4uski]

I sold all my international last year. US equities are good enough for me.

International was in tax deferred accounts, so it was easy.

IF one decides to hold international equities, it is usually better to hold them in taxable accounts where you can take advantage of the tax credit for foreign taxes paid. That benefit is wasted if you hold international equities in tax-deferred or tax-free accounts.

 

[imjustawarrior]

My portfolio is 20+% international equities. I have not been doing any rebalance from US to international, so the % has been drifting down. I think I will sell the international when I need money and just let the international decline.

I'm not a big fan of the tax reporting and tax drag of international relative to total stock market fund.

I think it makes sense to have international exposure for diversification, but I also think that need diminishes as one gets closer to his final day.

 

[MichaelB]

If I could ditch my international funds without big realized capital gains consequences, I would. I’m heartily sick of the tax hassle of owning them. If they are held in an IRA those tax hassles disappear.

Of course, doing that also means the foreign tax credit is lost.

 

[Chuckanut]

For many years I followed the standard advice to have a chunk of my equities in international index funds. After years of watching the international funds under perform the total US stock market, I started to sell them off, pay the taxes, and put the money in the total USA market. A decade later, that has proved to be a smart move.

 

[WhenIsItTime]

What is your view or pinion on holdings of Internatinal or Global Funds. I have one investment account that I hold 8 different funds and this coming week I want to change a few of them to different funds. I have always had some shares in international funds and actually have done fairly good.
Do you believe these funds are a value to your investment portfolio or not?

Might be helpful to share what fund you had that did well and what time period you are referencing.

From my purview, non-US has trailed U.S. most era's.

S&P 500 companies have 35% of their sales outside U.S. and for sure meaningful portion of operations. Good enough for me.

 

[audreyh1]

Of course, doing that also means the foreign tax credit is lost.

I would be so happy to see it go! The foreign tax credit increases your taxable income to ~match. For example for 2024 I had something like $1225 foreign tax credit, but $1230 in additional income due to the foreign tax paid by the funds. I didn’t receive that $1230, but I am still taxed on it and it still adds to my AGI. Also impossible to know or predict until after year end, so it interferes with accurate tax/AGI planning.

The whole thing is a royal pain in the butt. Not only the Form 1116, but also dealing with carryovers some years.

In other words, there is no benefit to receiving a foreign tax credit in this case of passive international income. Just a lot of extra paperwork, and a higher AGI so having to leave space when trying to stay below a certain IRMAA threshold and hoping you guessed well.

 

[JackJester]

I hold 10% International (Schwab International Equity SCHF). I try and follow the mantra of being diversified. But it certainly hurts when you compare the S&P total return vs International as shown in this pic.

But, yet I still want to hold some of these big world companies so I keep it in my portfolio (. C'mon... Nestle ...the world needs its chocolate. . Plus I own 2 Toyota Tacomas; great trucks!

Schwab International Equity ETF (SCHF)
Top 15 Holdings
Symbol	Holding	% Assets
SAP	SAP SE	1.47%​
ASML	ASML Holding NV	1.34%​
NOVO.B	Novo Nordisk A/S Class B	1.26%​
NESN	Nestle S.A.	1.07%​
7203​	Toyota Motor Corp.	1.05%​
ROG	Roche Holding Ltd Dividend Right Cert.	1.03%​
AZN	AstraZeneca PLC	1.00%​
NOVN	Novartis AG	0.99%​
SHEL	Shell Plc	0.96%​
HSBA	HSBC Holdings Plc	0.91%​
MC	LVMH Moet Hennessy Louis Vuitton SE	0.88%​
5930​	Samsung Electronics Co., Ltd.	0.86%​
RY	Royal Bank of Canada	0.83%​
CBA	Commonwealth Bank of Australia	0.80%​
SIE	Siemens Aktiengesellschaft	0.75%​

 

[mrfeh]

International (Non-US) versus US Equities (The "Arguments") - Bogleheads.org

Choose a percentage for ex-US and then stick with it.

 

[Dtail]

Used to have 25% Int'l stock in 2017 at retirement. Whittled it down to 10% at the end of 2019.
Sold the remainder in 2020 and will not go back in.

 

[aja8888]

Sold out of international holdings SCHF 5 years ago.

 

[Stormy Kromer]

FA's seem to push an odd percentage of international into their formulas to make it look complicated.

I'd bet any of them my house that I could beat them long term with VG Total Stock index over any time period they want.

 

[joesxm3]

I have been slowly dollar cost averaging into Matthews India Fund based on the idea that India is one of the few countries producing young people.