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What allocation do you have to international equities and your favorite funds?

MikeW
in Fund Discussions
Hi folks … it’s been a little while since I saw a posting on international funds. So I thought I’d start one. Curious what % of your equity fund holdings are in international stocks and what your favorite funds are. I’m currently only at approximately 4% and I am evaluating GSIYX for an addition. International has underperformed for so long now that it’s hard to get too excited about it. But I figure I should have more. Thx for your inputs
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Comments

  • yogibearbullyogibearbull
    What is the outlook for dollar?

    Dollar bottomed in 2008-11 around 72. Now it is 104.66, so +45.36% of the cumulative US fund outperformance in the last dozen years is just due to the currency factor.

    Many diversified funds (including TDFs) may have substantial exposure to foreign markets, but not enough for them to be labeled global.
  • Devo
    Hi @mikeW, I hope we can have a column for you in the coming month's MFO on International Equities allocation as Part I. Will try and write about funds next month.
  • BaluBalu
    edited May 30
    When US interest rates come down ($ should come down), US small caps should perform; do I need international?

    Did anything at Grandeurpeak change, causing you to give them a second chance? Fool me once and all. Edit: misread ticker in Mike's OP.
  • stillersstillers
    Hey, Mike. I think we've chatted about this but just in case not...

    ~10% of our stock exposure is in Foreign which is our standard allocation.

    Most of it comes via GSIHX, then secondarily via PRGSX, both NTF at Fido.

    We were unaware of GSIHX until stumbling onto GSIYX near BOY 2024 while managing a friend's 401k portfolio that was transitioning from one Adm to another.

    Bottom line, in FLG land, and possibly all of Foreign, there appears to be GSIHX and everybody else. We plan to hold GSIHX indefinitely and may roll our PRGSX allocation into it at some point when consolidating.
  • hank
    edited May 30
    32% domestic equities / 14% foreign equities (almost all developed Europe)

    - Equities 46%
    - Fixed Income 44%
    - Other (real estate / infrastructure / metals) 10%

    That’s from Fido’s analytics and looks correct to me.

    FWIW - In recent days I took the equity exposure up a bit from 40% to 46%.

    Favorite Funds? I don’t have any. But I generally allocate 10% to each fund.
  • BaluBalu
    edited May 30
    Devo said:

    Hi @mikeW, I hope we can have a column for you in the coming month's MFO on International Equities allocation as Part I. Will try and write about funds next month.

    You probably only have a couple of days to crank that out. It will be great if you are able to add in or separately discuss correlation between US small / mid caps and international investing Or otherwise, why US investors need international equity investing?

    I know we could have a separate thread on that topic but it will never be as scientific as what the magazine team would put out.

    P.S.: I am at 2% of PV for international equity and 75% of that is in a trading account, which means I really do not have any dedicated international equity investment.

    Thanks.
  • MikeW
    Devo said:

    Hi @mikeW, I hope we can have a column for you in the coming month's MFO on International Equities allocation as Part I. Will try and write about funds next month.

    That would be wonderful Devo! Thank you. Would be very interested in hearing your thoughts on the case for investing internationally…. They haven’t matched US performance for 15 years or more
  • a2z
    FYI
    lipper dataset means MFO screener (and most others) classify 'foreign' not based on corporations' country/region based economics, but HQ location. ridiculous!

    https://www.mutualfundobserver.com/discuss/discussion/comment/175924/#Comment_175924
  • Devo
    @balulbalu I cant dont the us small/mid vs international this round. maybe another time. I am writing about the asset allocation process followed by many institutions through first hand experience at a school endowment and learnings for international equities weights as a result of that. I wanted to write about the interesting international funds and stocks, but thats a July issue now.
  • MikeW
    @stillers @hank @balubalu thanks very much for the feedback. Yes Stillers you were the one who steered me to GSIYX …. Thank you for suggesting I take a look. And you’re right I haven’t found another diversified international fund that has consistently outperformed over last 10 years. One interesting fund that @Benwp suggested is BISAX. It has outperformed since 2021 and is way up this year but had a pretty significant MAXDD in 2022.
  • WABACWABAC
    I am at 11% or so in the IRA per Fido. My taxable is roughly 16%, but that only tracks the designated foreign funds.

    I have been reasonably happy with IHDG and FYLD. GRID is 50% foreign, but it's not the kind of fund most people would want to build an IRA around.

    I was happy with DODWX, but it didn't fit into my IRA planning given the fees on it at Fido. And I don't feel the need for more foreign in the taxable.
  • Mitchelg
    DIVI is my favorite. Good dividend, quarterly dividend payouts, 9 basis point expense ratio.
  • Tarwheel
    We’ve got about 15% of total assets in our IRAs invested in foreign stock funds. Largest and longest term holding is ARTKX, which is closed to new investors. Other foreign funds are FTIEX, FVIFX and FMIJX, all relatively new holdings with good long term returns. We also have substantial holdings in FLPSX, which is essentially a global fund. All of our foreign funds have performed well over the past year, a welcome development after dismal returns for many years.
  • Observant1
    edited May 31
    I performed a "quick and dirty" portfolio check two weeks ago.
    Approximately 26.5% of the portfolio was allocated to foreign stocks via two international funds:

    1) MFS International Equity Fund Class 3A (CIT)
    2) ARDBX (relatively new holding)
  • MikeMMikeM
    edited May 31
    Portfolio-Check-Up on Schwab says I have about 5% international over all. If we are just looking at percent of equities, that would make me about 8-10%. My only dedicated international fund is FMIJX with smaller positions in a global fund, GQRPX and Canadian stock, CNQ.

    As Yogi mentioned, the dollar is strong. I don't think international stocks will out perform domestic until that trend reverses. My own opinion is domestic stocks will continue to out perform for the foreseeable future.
  • MikeW
    Really interesting discussion and thanks to you all for your comments. A number of excellent funds. @Observant1 Ardbx is intriguing in particular… just starting to research it. It has done quite well since launch and has an attractive risk profile. It’s also performed well even with a cash stake of 21%…. What attracted you to the fund? Thx
  • sma3
    We have about 5% international. Most of that ( 60%) is in individual stocks run by the manager we use for about 20% of our total portfolios.

    He has done a super job in the last two years with just about 6 foreign stocks. They are up 75%, a lot better than his domestic picks.

    We also have about 2% in Emerging markets

    We own MOWNX CVISX EWJV BISAX SIGIX GQGPX and KGIIX and a smattering of some Chinese ETFs



  • Observant1
    edited May 31
    @MikeW,


    My primary international fund is comprised almost entirely of developed foreign large-caps.
    I wanted a foreign small-cap fund or EM equity fund to complement it.
    ARDBX uses a strategy similar to that of ARTKX which is applied to foreign small-caps.
    Both comanagers previously worked with David Samra on ARTKX and are well-versed in the strategy.
    I've been interested in ARDBX for a while but the high expense ratio (1.43%) was a major deterrent.
    The highest expense ratio for my other funds is no greater than 0.50%.

    The Insights section on the ARDBX home page has useful info regarding the fund's investment process.
    https://www.artisanpartners.com/individual-investors/investments/international-value-team/international-explorer-fund-ardbx.html

    David Snowball authored an article about ARDBX in 2022.
    https://www.mutualfundobserver.com/2022/06/launch-alert-artisan-international-explorer-fund/
  • PRESSmUPPRESSmUP
    Currently the international is sitting at a meager 8%, with GSIHX dating from 2018, and a 2023 addition of it's EM counterpart, GQGIX. I am pleased with both and would consider adding to the EM fund.

    In my taxable account, I am planning a move into IDVO. This is from the same shop as DIVO, and derives benefit from European volatility in it's approach of using covered call options to enhance the distributions.

  • changchang
    edited June 1
    “Curious what % of your equity fund holdings are in international stocks and what your favorite funds are.”

    Not sure because I don’t use X-ray but I’d guess 25-35% international.

    Favorites:

    Taxable: passive, dividend paying ETFs (so you can declare foreign taxes withheld). DFIV, FIVA, SCHY, AVIV, VIGI, VYMI. (I own the first one.)

    Tax-deferred: actively managed and growth — FOSFX and FIGFX (I own the first); and for EMs: FSEAX and FEDDX (own both).

    I also have a portfolio of individual (foreign) stocks.
  • MikeW
    Thanks to @sma3 @PRESSmUP and @Chang for your additional inputs here … and thanks very much @Observant1 for providing the details on ARDBX. Didn’t realize that David had covered the fund.
  • FD1000
    edited June 2
    Some forget that "Roughly 40% of S&P 500 revenues are generated outside of the U.S., and about 58% of Information Technology company sales were sourced from abroad".
    See (www.globalxetfs.com/sector-views-sp-500-sensitivity-to-global-factors/).

    Since 2010, I don't have any foreign exposure.
  • Richarddubow

    I read with great interest Devesh Shah thoughts this morning and reasoning on helping to take the international allocation on the endowment he serves on down substantially.
    The question I have for him with zero criticism is I have read and watched Nobel prize winners like William Sharpe and Eugene Fama and Fama’s frequent collaboration Ken French suggest that there is very little signal in observations five , ten, or even twenty years out.
    Shah who is clearly a very smart person must know that.
    In order to move as sharply away from where the global portfolio clears or reaches equilibrium he is in fact making a big tactical bet.
    If we enter a period like 2000-2010 where essentially the S&P had zero returns ( not impossible given the elevated valuation of US stocks) the “bet” the board made goes against the idea of being market agnostic.
    I’m curious if they aren’t succumbing to recency bias even though the recency has persisted for a very long time?
  • Devo
    edited June 4
    Thank you for the feedback. I think it’s good to criticize in the right spirit because we learn from it when done correctly. Boards, as you probably know, work slowly and step wise. Goal number 1 was to stop doing what didn’t make sense: investing in companies based on domicile in a passive international etf. Goal number 2, which is already in motion and implementation is to get comfortable with a few active managers in that area. To invest, and to scale up the percentage weights back up to mid teens. I think we can get there by middle of next year. Transitions are not perfect and neither are my ideas. Just trying to make sense of what I see.

    The July MFO article will try and highlight some of these funds, the international stocks, and hopefully inspire some to switch from passive to active in that area. Only time can tell if such active decisions work. One thing we do know is passive has not done what it promised abroad. It works beautifully in the USA but not abroad, at least not consistently.
  • sfnative
    More kudos for that article. I'm at 15%, half of it indexed, because "that's what the experts say." (Actually, some of them suggest much more than that but thank goodness I didn't go there.) Still rue the opportunities to get into ARTKX that I skipped over ("too expensive, it'll revert to the mean"). Live and learn, and I think this article has added to my learning.
  • WABACWABAC
    If ARTKX is the standard, it seems to me that passive IHDG and HEFA have done alright over their ten year histories. Maybe the hedging part of their strategies requires some activity.
  • BaluBalu
    edited June 4
    Passive works when beta is eating alpha. I think the bigger lesson is stop doing what is not working, not just in investing. But it is difficult to quit bad habits, like picking up cigarette butts or deep values. If inclined to sticking with convictions that are not working, at least go with a proven manager / fund and do not try to do it yourself with passive funds.
  • WABACWABAC
    BaluBalu said:

    Passive works when beta is eating alpha. I think the bigger lesson is stop doing what is not working, not just in investing. But it is difficult to quit bad habits, like picking up cigarette butts or deep values. If inclined to sticking with convictions that are not working, at least go with a proven manager / fund and do not try to do it yourself with passive funds.

    What do you mean when you say "beta is eating alpha?" I have been running this over in my mind for a while, and I'm not getting anywhere on my own. It doesn't help that M* hasn't updated their alpha and beta numbers.

    I'm talking to myself in the following, but anyone can jump in. :) Passive is a funny term. IHDG seems pretty darn active in its thesis:
    IHDG screens for quality and growth through a variety of factors: expected earnings growth, return-on-equity and return-on-assets. Selected securities are then weighted according to dividends paid over the preceding year. The index rebalances annually so that no individual security has a weight greater than 5% and each country or sector has a maximum weight of 20%. The portfolio is hedged for currency fluctuations against the USD. In employing this hedging strategy, the index uses forward currency contracts to mitigate risks associated with the movements of foreign currencies relative to USD.
    I should add that Devo's post was a fun read. Looking forward to the next article.

  • Baseball_Fan
    maybe slightly off topic but a couple thoughts/comments;

    See Thornburg article dated May 17, "forget mag 7 and look at Euro fantastic 5"...SAP, ASML, AstraZen, LVMH, Novo...has actually outperformed since Jan 2022...hmm, no kidding, really?.

    Isn't Intl investing really a currency play on a weaker dollar...which might be in our near future, no?

    I've got monies in TSUMX Thornburg Summit Fund...multi asset...hold intl stocks and bonds to some degree...

    Good Luck and Good Health to ALL,

    Baseball Fan
  • Baseball_Fan
    https://thornburg.com/article/forget-the-magnificent-7-why-you-should-invest-in-europes-fantastic-5/
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