Newer vanguard funds/ETFs?

[lernd]

Definitely a Vanguard person - have my Roth IRA with them as well as my "taxable" account.  Had a pretty simple Total Stock Market/Total International Stock Market/Total Bond market mix in the Roth that I added complexity too a few years ago by adding the Emerging Markets ETF (I used the ETF as the mutual fund had too high a required minimum) and REIT index.  Total combined of these "extra" holdings is about 10% of my Roth Portfolio.  I was looking at some of the other newer ETFs with Vanguard - mainly:

Emerging Markets Govt Bond (VWOB)

Total International Bond Index (BNDX)

All World Ex-US Small Cap (VSS)

Global Ex-US Real Estate (VNQI)

I am curious about perhaps adding these ETFs as I would assume that they would further diversify my portfolio as the majority of their holdings are not in my current portfolio.

Has anyone else used these ETFs and if so, in combination with what?  Thanks!

 

 

[TheGipper]

If you believe in the small cap premium and you are investing for the long term, VSS makes some sense to add, as international funds like VTIAX are very large cap heavy. I hold a small % of VSS in my Roth.

I personally don't believe in adding international bonds. Vanguard disagrees.

Not educated enough on international real estate to comment.

[Lithium]

I only have VSS, and have a sizable amount of it.  My portfolio is complicated enough already without adding those others.

What would turn me off to international real estate and bonds is they'd be too tax inefficient to hold in a taxable account, but I wouldn't be able to enjoy the foreign tax credit in the Roth IRA.  Either way, IRS wins.

[Hatton]

I own VSS and BNDX.  I have a very complicated portfolio.  Long story. I have owned VSS for a long time and think it makes huge diversification sense.  I bought the BNDX on the recommendation of the CFPs at Vanguard.  I have thought about VNQI but have never pulled the trigger.  Emerging markets scare me.  Interestingly when I got a financial plan from Vanguard they wanted me to sell VNQ which I did not do.

[MP]

Great thread. So I posted about my TDA solo 401K(under retirement accounts) and trying to buy the free/no com. ETF's. I am questioning if a VEU/VSS 75/15 spread is adequate to capture the whole foreign market. I saw both got only 2 stars from Morningstar and am a little nervous if I am making a good selection there. I have around 20K sitting in my money market there and want to buy biweekly (dollar cost averaging). Would you buy VEU/VSS?

[Zaphod]

VWOB is a dollar denominated foreign bond funds, and whats supposedly the play this year due to currency effects would be local currency government bonds instead. I have been buying emerging markets this year and local currency bonds are next, but theyve already made a huge move, hopefully more to come when I get in.

[The White Coat Investor]

I bought VSS (International small) the week it came out and have been pleased with that decision. I don't hold the other asset classes. I've already got a complicated enough portfolio. There is a big gain going from one asset class to three. There is a decent gain going from 3 to 7. There is very little gain going from 7 to 10. Once you're beyond 10, you're probably making things worse. I'm already at twelve, so adding those would be making things worse for me. Only you can decide if the additional complexity is worth it to you. The complexity adds up over time. My retirement portfolio is now spread over 12 asset classes, three IRAs, a cash balance plan, and four 401(k)s. This ignores completely my taxable portfolio, HSA, my UGMAs, my 529s (I have over 20 of those), and my short term savings.

Add new asset classes at your own risk. My spreadsheet now has a column "GS" and a row "456." That's where this road you're starting down leads.

[Zaphod]

The White Coat Investor wrote:

Quote

Click to expand...

True enough. Its always good to look at the prospectus and look for redundancy and if there really is any difference to make things worthwhile. As you get into more smart beta funds its good to look at definitions as well, one companies small cap is another micro or mid cap and that can make a difference over time as you may just be recovering your total or s/p etc index. Make sure the added complexity is doing something and its just not a different flavor but still highly correlated mix.

The only reason small or value factors have historically worked overall is because they have periods of terrible draw downs, maybe add to them after poor years, etc...or discrepancy from the other indexes.