Advice on international founds in 403B and taxable accounts

[DMFA]

To piggy-back on this: anyone with TSP experience, TSP I-Fund vs a private international index fund held in a different retirement account, for example, VTIAX?

The I-Fund is meant to track the MSCI EAFE index as opposed to total Ex-US, so no emerging markets while VTIAX is 15% EM, but can't beat an ER of 2.9 bp (1/4 of VTIAX's 12).  Returns are very similar at 1,3,5,10 so I'm basically thinking it's a wash and I should just go with the cheaper one.

[Andrew]

Actually I was rethinking whole strategy. Since I have to invest 20-22 % of my retirement in taxable( in order to put 20% of our gross income toward retirement) I could invest all international in Vanguard total international index. That would give me my desired 20-25 % of international exposure. This is much cheaper than found available in 403B. Then I would buy Vanguard institutional total stock in 403B which has very low ER. My reasoning is to keep expense ratio low and keep the same asset allocation.

What do you think?

[Andrew]

Thanks for input.

Going back to Bott1637 suggestion:  I have bought small amount of emerging market and small cap in taxable ( 3k of each)few months ago when i have started that account Not sure if that was a ideal move but that is how we learn. I will not pay any phantom taxes on them so i probably keep them as is without investing more. Technically i could sell them prior the end of year and simplify my portfolio? of course i will have to pay taxes on that transaction. What would you do?

General question. Do you reinvest in taxable account automatically or put it in monney market and reinvest ti together with new contribution? Just curious

We already have some Euro pacific R6 in 403( as it was advised by our former "financial planner"). Therefore my dilemma is whether to keep investing in Euro pacific or switch to Vanguard. Either way in few years most likely i will rollover this to 401k and buy funds that i want.

[VagabondMD]

I would be comfortable with either of the two choices as a core, international holding in the tax-deferred fund, with a slight preference for the Vanguard fund, as it tracks the index pretty darn close, and I prefer the value tilt.

[Bott1637]

I would not want to hold emerging markets nor small cap in taxable. If you want the exposure or tilt to those I would put them in ROTH.  I have similar available international funds in my 403b and I don't use them.  A lot of this depends on what is available in your 403b of course but I would place the REIT, small cap/emerging in ROTH and place my taxable account in the international funds. There is an international tax credit you can use that way and there is no easier tax loss harvesting partners than Total International (VTIAX) and FTSE All World (VFWAX).

[Andrew]

Thanks for advice.

In terms of my taxable: My bonds percentage is low(10%) and will remain low because I am not planning to buy more bonds in taxable. I am going to keep my taxable for total stock market only.

[Andrew]

I have Roth IRA which I started this year. They are less than 10% of my total assets. So I have REIT in my wife's and Vanguard total US stock in mine to keep it simple. So answering a question I don't have much space there yet.

My taxable account: I plan to have us and international index . 403b I keep for bonds and US and international stocks. I am aware its is not best allocation out there but much better and cheaper than my previous one managed by financial advisor.

 

[jfoxcpacfp]

Andrew wrote:

I have two international founds to chose in my 403B. Both are actively managed unfortunately, with very similar ER(0.5 vs 0.46) Vanguard International Value(VTRIX) 0.46 ER American Euro pacific R6 (RERGX) 0.50 ER Both have no front load cost etc. What are your thoughts.

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Do you want to limit your international exposure to Euro-Pacific or the the world ex-US? Choose that one - there is no right or wrong answer. Won't comment on your taxable account as I never recommend bond funds. (Except that it appears you are putting taxability ahead of growth and income.) They are both good funds and will fill your international category just fine.

Actually, I just checked out the world regions in VTRIX and it is pretty highly concentrated in the same areas as RERGX.

[DMFA]

Can you place your international holdings in another account with better options? Your IRA, maybe? If they're high-turnover funds they wouldn't be great for taxable.

[Andrew]

I have two international founds to chose in my 403B. Both are actively managed unfortunately, with very similar ER(0.5 vs 0.46)

Vanguard International Value(VTRIX) 0.46 ER

American Euro pacific R6 (RERGX) 0.50 ER

Both have no front load cost etc.

What are your thoughts.

Other questions is: What do you think about Small cap and emerging markets in taxable account?- have 3k of each( lest than 10% of all taxable assets) don't plan to buy more in near future. Would you sell it to simplify it or just let it sit for now. My Taxable contains  Vanguard total US stocks and total international and Vanguard Muni bonds.