In this video I will backtest the performance returns of the Total US Stock Market and compared it to the performance of the Total International Stock Market since 1986! The results might shock you!
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I am not a financial advisor, these videos are not financial advice. The purpose of these videos is to document my personal investing journey and hopefully entertain you in the process. Please do not take any of this as financial advice and always consider the risks before investing.
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Do you own any international index funds?
I’ve had a 20% allocation into RERGX in my 401k since 2018 when I entered the plan. It’s performed quite nicely the past 12 months or so. It had been holding my performance back a bit until 2020. This is my current allocation. I did have mid caps at 30% and small cap at 10%, but I recently changed them to both 20%
40% VIGAX (it’s the only good large cap fund available in my 401k. The rest are actively managed funds that have not had good performance)
I like it! Sometimes with 401ks it’s tricky because we don’t have a lot of index fund options and you gotta do the best you can to set a strategy and work with what you got
Torn between fzlix and ftihx
@Tim Bo that’s not how a market cap index fund works, what you are suggesting sounds like a actively managed fund which there is plenty of those underperforming ones to pick from
I have the Fidelity Total International Index Fund and Fskax
I own both in my portfolio
Thanks for the strategy! I follow the Moki 3 method as close as I can in my 401. 60% SP500, 20% Total International, 20% Extended Markets. Wish we had an options for a Russell 2000 and a Total US Market fund in the 401.
That’s a good alternative strategy, would have as good performance as small caps but still very effective
I personally don’t own any. Not bad from a diversification perspective, but there’s enough international revenue growth in American corporations (for now at least) where I feel covered. Could change in the future, but I’m good with my allocation. I’m also dealing with a shorter time horizon, so that factors into it as well.
Own FTIHX for the simple reason that it holds over 4700 stocks.
Good reason to hold it
International growth fund ended up being the best performer for me. It seems international active managed growth tends to be more advantageous as long as fees are reasonable. The international index blended index funds do not seem to have the same reliable outperformance as the domestic blended index like a Russell 1000 or S&P 500.
No international stocks for me. I’ve been overseas, and frankly, some of those countries scared the hell out of me. Example: traffic in Italy; it was total chaos. I ain’t investing a $1 of my money in a chaos country. Warren Buffett likes to invest in U.S. stocks. Me too!
I can understand that
Berkshire Hathaway has plenty of international holdings in countries like Japan, China and Israel. As far as Italy, it makes up a grand total of 1.6% of the total international index. The country could cease to exist and an investor in the fund would be fine.
You never to visit Los Angeles, San Francisco , or Chicago 🤣
Nice I already currently have 80% FSKAX/20% FITHX in my Roth IRA.. I think people who have started investing in the last 10 years see how the US Markets have been crushing and dismiss International when the long term data shows this has and can flip.
It’s every other decade for international funds.
Thank you for your work in this video. As an European this opened my eyes in a slightly different direction : namely why it is okay even for us to overweight the US allocation through an MSCI World ETF or Vanguard FTSE All World with over 50% into the US Stockmarket – because this market outperformed now for 35 Years – despite what Paul Merriman often mentions, that statistically there is a country- rotation every 10 years. So even if the comparison you showed might leed to performance chasing it also is betting on momentum 😉
But I have one question left I’m always worried of: what about currency risk? Couldn’t that destroy my performance since I get by returns in Euro, even if the ETF is Dollar based!?
Currency risk is a real fear for a lot of investors that are investing in funds that hold currencies other than their home countries. It’s up to you to determine how much of that risk you are willing to take. For me personally 20% is the max I am willing to handle risk wise in a different currency other than the US dollar. Of course when you get into a “total” international index fund it will have have many different currencies within it that will further help diversify away some of that currency risk as well.
Also to Paul’s point about a country rotation every 10 years, he is not wrong. There are individual countries than have out performed the US on a decade by decade basis, but picking which ones those will be before they do it is like looking for a needle in a haystack. I just display data as a whole US vs Global (ex US) because I believe in broad diversification. Thanks for the comment 🙂
FZILX! Why pay more?
Fidelity ZERO funds ftw
VTSAX & Chill for me.
Why not own VT and let the largest companies float to the top?
With VT you get a higher yield than a pure play U.S. fund with slightly less growth on average.