Plain Vanilla Foreign Funds

dryflower

What are your favorite foreign funds? I'm really looking for something middle of the road and boring. It's purpose is simply to represent exposure to non-US markets -- as diversification within an IRA. I would be building the position towards 10%.

I currently own DODFX, which I believe is a keeper, and MSILX, which I am looking to replace. I am thinking about something from American Funds, assuming I could buy it without a load -- or possibly an index fund or ETF.

So what would you recommend, and why?

bee

VWIGX keeps showing up on my screeners...low ER.. Large Cap Foreign Growth fund.
Here its footprint:


I Hold FMIJX. Since its inception (2010) it has provided a smoother ride. I believe charting other funds against FMIJX will reveal the volatility of other funds (both over and under) and might be a tool for identifying when these funds are over performing or under performing.

Comparing FMIJX to (VWIGX, DODFX,& MSILX) since inception:


Since the 1/26/2018 market high:

Ben

VWIGX has 8.1% of its holdings in the USA. Amazon is its 4th largest holding. This is not a bad thing but it does mean the fund is not a foreign fund but an international one.

dryflower

Thanks, Bee and Ben for your insights. It's funny that the very next day after Bee posted his suggestions, I got a report in the mail from FMIHX that included
FMIJX. Also M* recently ran an article "3 Superior Core Foreign Stock Funds". The 3 were FMIJX, and American Fund IGAAX, and an index Fund VTIAX . So I think we've definitely found some good ones. Also, Schwab has what appears to be a good index fund SWISX

JoJo26

Ben said:

it does mean the fund is not a foreign fund but an international one.

This makes 0 sense.

dryflower

It makes total sense if you know the definitions. What Ben is calling an international fund is sometimes called a World fund.

davidrmoran

meh, hygiene is not observed always --- Templeton Foreign holds about the same low percentage of US stocks as D&C and Oakmark.

JoJo26

dryflower said:

It makes total sense if you know the definitions. What Ben is calling an international fund is sometimes called a World fund.

Foreign=International, World=Global

Like I said, what @Ben said makes 0 sense.

msf

It was pretty clear what Ben meant. That said, I've never seen "international" fund used to mean a fund with substantial (say, over 20%) domestic holdings.

But I have seen "global" or "world" applied to funds that are "international", i.e. strictly foreign. Morningstar defines its World Bond category to include international bond funds. For example, VTABX.

"In the English language, "global" and "international" tend to be used interchangeably—hence the confusion in the investing world when we are told that global and international funds have completely different investment goals and provide investors with different kinds of investing opportunities."

https://www.investopedia.com/ask/answers/03/071103.asp

Ben

The original question was about Foreign funds. Context made it clear that what was meant was a fund that invested in companies located outside of the USA and by implication, it meant funds that did not invest in companies in the USA.

According to the dictionary that is part of my computer "International" means something involving more than one country. That's the first definition given. And that is the meaning I was using in my post.

Adhering to that definition, a mutual fund or a business or a brass band, or any enterprise that involved the USA and any other country or countries would be an international endeavor, and any such thing that involved two or more countries and *not* the USA would also be "international". But if it did involve the USA it would not be "foreign".

USA and Sweden = International. Sweden and Lesotho = International. Tuva and Argentina and France and Australia = International. Add the USA to any of the above and it remains international.

A mutual fund that invests in companies located in any of the countries I just mentioned or any countries I did not mention, are —within the context of the original question — "foreign funds" if they do not invest in the USA.

What I meant, then, was that a fund based in the USA that has 9% of its assets invested in American companies, and a substantial stake in Amazon, cannot be called a Foreign Fund. Perhaps "International " was not the best word to describe what it is. Perhaps "global" or some other word is better or more typical of investment language. I was using "international " as a word to contrast with "foreign".

davidrmoran

Well. If y'all are going to try and be strict as to diction, you probably (as I tried to suggest) will have to do individual entity parsing, because even those committed to being ex-USA / ex-US (one data descriptor in the etf world; see e.g. http://etfdb.com/type/region/global-ex-us/) may have some US companies. A small amount, under 10% (guessing here, based on skimming).

Mfunds, anyway.

In a global world (how's that for diction comedy), little of this matters enormously, given how everyone sneezes together during cold season, mostly, or whatever the apt image used to be.

joe74

People sure like to quibble around here. A mutual fund with a name suggesting that it focuses on a particular type of investment must invest at least 80% of its assets in accordance with its name.

To the original question, VWIGX is one of my favorites. I also have FMIJX, but it has not really been tested, yet. It is 17% US if that bothers you. OAKIX is around 11% US.

joe74

Plain vanilla and <1% US stock: VTIAX

davidrmoran

As for names, sort of

VWIGX is also ~11% USA.

DODFX just under 8%, while per M* its benchmark, FLB, is around 1%. So strict.

FSIVX is 0% USA (Fido) or 1.5% (M*).

So sweating the small stuff is, well, just sweating.

msf

If one is going to take an absolute position, there's no point in agonizing over how much a supposedly foreign fund has invested in Amazon, or in any other domestic company.

Would you say that because 0.32% of SGOVX is NEM (Newmont Mining); that must mean that First Eagle Overseas isn't all overseas after all - that it is a global fund? Perhaps we should call it First Eagle Global? Nope, that's been taken

Best of luck in finding a "pure" domestic fund (Samsung represents 9% of YAFFX), or an international fund, or a stock fund (with no bonds or cash), or ...

You may be more bothered by the fact that the "impurity" is concentrated than by the magnitude of the impurity. (One infers that from the fact that you highlighted the Amazon ranking after stating the total domestic percentage. It was superfluous information.)

In terms of classifying, it shouldn't matter if the 8.1% impurity is all Amazon (or Samsung), or a dash of a dozen different companies.

Ben

I was accused of making zero sense. Should I have remained silent? I meant to demonstrate that I did mean something. I am not anything like an expert on mutual fund word meanings. I am quite certain as to what "international" and "foreign" mean in layman's everyday terms. I meant nothing more than that.

davidrmoran

Right, the lay terms get squishy (rightly or wrongly) in the real world of mfunds, that's all.

As for merit, I tend to align with this analysis myself:

https://www.usatoday.com/story/money/2015/01/16/investing-international-funds/21825245/

SP500 is plenty of foreign exposure, he says (using the word international )

bee

I still like VWIGX...however you dice it.

dryflower

Not that it makes any difference to me, but M* says that Ferguson, Accenture, Schlumberger, and Millicom are US companies, whereas FMIJX says the companies are from Jersey, Ireland, Curacao, and Luxemburg respectively. So I believe FMIJX claims to be 100% exUS

JoJo26

Anybody that works in the investment world knows that when a fund manager runs an "international" portfolio it is one that would get benchmarked against an ex-U.S. index (ACWI ex-U.S. or EAFE). That said, lines have blurred these days and businesses themselves are global so fund managers may deem U.S.-based companies as fitting an international mandate if their ex-U.S. business is a growth driver.

Ted

@dryflower: I'll give you plain vanilla without sprinkles, just buy 6,161 foreign stocks contained in VGTSX and be done with it. All for an ER. of .17%
Regards,
Ted

JoJo26

Ted said:

@dryflower: I'll give you plain vanilla without sprinkles, just buy 6,161 foreign stocks contained in VGTSX and be done with it. All for an ER. of .17%
Regards,
Ted

As @Bed would say, "this isn't foreign, it has 0.95% US Stock!"

Bahahahahaha.