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Old 11-12-2019, 04:04 PM
zuren zuren is online now
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Default Retirement portfolio - Foreign stocks?



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I'm reallocating funds in my retirement accounts and trying to select a foreign stock fund. All the advisors/experts say you should have a percentage (for me at my age, 12-15%) in their portfolio.

Does anyone have a foreign stock fund that they like? I'm a Fidelity customer, so I'm looking at:

FTIHX
Fidelity Total International Index Fund (Stocks - Foreign Large Blend)
Invests in: Developed Markets, Emerging Markets, Large Cap, Small Cap
Exp Ratio - 0.06
1 yr return - 10.88%

FZILX
Fidelity Zero International Index Fund (Stocks - Foreign Large Blend)
Invests in: Developed Markets, Emerging Markets, Large Cap
Exp. Ratio - 0.00 (not a typo)
1 yr. return - 11.79%

Comparison on 1 page: https://www.fidelity.com/fund-screen...2CFZILX&tab=pf

These are newer funds, so not a lot of historical performance to tell me much, but all of the longer standing funds seem to have high expense ratios and mediocre performance. I had an emerging market fund for 10 yrs. but just dumped it since performance was garbage and fees were high. The fund with zero expense ratio is intriguing.

This article explores the 2 funds above a bit more:

https://www.wallstreetphysician.com/...ndex-fund-buy/

Thanks!
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Old 11-12-2019, 04:24 PM
PalmettoTree PalmettoTree is offline
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Quote:
Originally Posted by zuren View Post
I'm reallocating funds in my retirement accounts and trying to select a foreign stock fund. All the advisors/experts say you should have a percentage (for me at my age, 12-15%) in their portfolio.

Does anyone have a foreign stock fund that they like? I'm a Fidelity customer, so I'm looking at:

FTIHX
Fidelity Total International Index Fund (Stocks - Foreign Large Blend)
Invests in: Developed Markets, Emerging Markets, Large Cap, Small Cap
Exp Ratio - 0.06
1 yr return - 10.88%

FZILX
Fidelity Zero International Index Fund (Stocks - Foreign Large Blend)
Invests in: Developed Markets, Emerging Markets, Large Cap
Exp. Ratio - 0.00 (not a typo)
1 yr. return - 11.79%

Comparison on 1 page: https://www.fidelity.com/fund-screen...2CFZILX&tab=pf

These are newer funds, so not a lot of historical performance to tell me much, but all of the longer standing funds seem to have high expense ratios and mediocre performance. I had an emerging market fund for 10 yrs. but just dumped it since performance was garbage and fees were high. The fund with zero expense ratio is intriguing.

This article explores the 2 funds above a bit more:

https://www.wallstreetphysician.com/...ndex-fund-buy/

Thanks!
There are segments like foreign stock that I am not comfortable investing in individual companies. So such ETFs seem to be a good idea to me. That said in general I am not a fan of index ETFs. I do think Fidelity is a good company to use.

Doubt that helps much.
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Old 11-12-2019, 05:55 PM
Fermion Fermion is offline
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I think you can get enough diversity in total stock market heck or even a S&P500 index. So many companies have worldwide operations now.
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Old 11-13-2019, 10:19 AM
zuren zuren is online now
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Originally Posted by Fermion View Post
I think you can get enough diversity in total stock market heck or even a S&P500 index. So many companies have worldwide operations now.
Part of my underlying reason for posting is because I have the exact same thoughts! With globalization, all the markets seem to move in response to each other anyway. I have looked at other international funds that have been around longer and there are blips where the foreign funds did better than the SP500, but for the most part domestic stocks have dominated. During the Great Recession, the domestic and foreign funds I looked at all fell together, so it isn't like being invested in one vs. the other sheltered anyone from losses.

I already have most of my money in a SP500 index fund, and here is a comparison of the foreign stock funds with that SP500 fund:

https://www.fidelity.com/fund-screen...2CFXAIX&tab=pf

The SP500 has stomped these foreign funds! I'm having a hard time justifying putting money in a fund that all the talking-heads say I'm supposed to have, but performance has been inferior to just keeping my money in domestic funds.

I found a CNBC article from 2018 that claimed that foreign markets will outperform U.S. markets over the next 10 years. So far, that prediction is not playing out and hard to say if it will.

Thanks for the feedback!
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Old 11-14-2019, 12:20 PM
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Asag Asag is offline
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The DAX has squeezed past the S&P 500 by a sliver in the last year so it’s not a particularly hard sell. A globally diversified portfolio is no bad thing.
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Old 11-21-2019, 01:29 AM
small.business.guy.1 small.business.guy.1 is offline
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Ever heard of MSCI or Bloomberg Barclays Global Aggregate index?

One day you might - IF you have a pension. To your ever lasting regret......

Quote:
MSCI Inc. (formerly Morgan Stanley Capital International and MSCI Barra), is a global provider of equity, fixed income, hedge fund stock market indexes, and multi-asset portfolio analysis tools. It publishes the MSCI BRIC, MSCI World and MSCI EAFE Indexes.
MSCI Background

But here's the real story:

Quote:
The MSCI global equity indexes have been calculated since 1969 and include MSCI World[14] and MSCI EAFE.[15] Initially, the company used eight factors in developing its indexes: momentum, volatility, value, size, growth, size nonlinearity, liquidity, and financial leverage.[16]

In 2018 MSCI announced it would begin including mainland Chinese "A" shares in its Emerging Markets Index. Initially the domestic Chinese companies received a 5% weighting in the index even though the stated methodology called for a 40% weighting.[17] While MSCI is the last major index provider to include the companies, the decision has proved controversial due to the fact that many Chinese listed companies refuse to permit the Public Company Accounting Oversight Board to inspect their financial records, thereby sparking criticism and questions from Senator Marco Rubio.[18][19][20] In February 2019, The Wall Street Journal reported the decision was the result of pressure from the Chinese government.[21] In March 2019, CNBC reported that MSCI would quadruple the weightings of mainland Chinese shares in its global benchmarks
These Indexes are what many, many pension funds and investment funds rely on for making investments. These indexes currently 'recommend' investing a substantial amount of our retirement funds into off shore Chinese corporations.

To make these investments even more questionable, these Chinese companies are not even required to meet US accounting standards. And if you read the articles, you will see that China has made it far more difficult to get money already invested in China back out of China. Basically China is quickly becoming a 'roach motel' of the financial investment world.

Money goes in - never is seen again. It's in China for the duration.

IF Hong Kong totally goes TU and the US pulls their favorable trading status (See story below), this really changes things:

Quote:
The US House of Representatives passed a bill Tuesday sought by pro-democracy protesters in Hong Kong that aims to defend civil rights in the semi-autonomous territory, prompting an angry response from China.

The Hong Kong Human Rights and Democracy Act, which will now move to the Senate before it can become law, has drawn rare bipartisan support in a polarized Congress.

The law would end the Hong Kong-US special trading status unless the State Department certifies annually that city authorities are respecting human rights and the rule of law.
This is a step where US-CHINA financial dealings get crazy

IMO, this has the likely potential for the 2007-2009 "The Great Recession" all over again - only this time the Wall Street a**clowns will be screwing over US retirement and pension funds. They got a 'pass' back in 2007-2009 - not happening this time. There's just too many people out there who will understand what is happening. And many of the population has very long memories about what happened in 2007-2010.
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Old 11-21-2019, 05:39 PM
Mule Skinner Mule Skinner is offline
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I hold foreign stock positions as a hedge against what might happen here.
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Old 11-22-2019, 01:32 AM
small.business.guy.1 small.business.guy.1 is offline
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Well, here's a VERY interesting story that ties directly into these Index funds with a Chinese company:

MSCI flip-flops on a global index stock - look what happens (Hint: 98% loss in value in 1 day).

This is from the user comments area. Couldn't be said better:

Quote:
Before Artgo detonated there was already concern about including Chinese companies in the MSCI because of that automatic capital transfer from pension and other funds into those companies.

In the past that didn’t matter too much because everyone was on the same team playing by the same rules. Ford and VW were just auto companies. Today that benign situation does not exist. Geopolitical rivalry even differences in ‘climate’ policy are creating new blocs with different objectives and rules. Doesn’t matter if Ford develops a ICE with zero carbon emissions that goes 100 mpg the EU has mandated cars must be powered by electricity in the next 20 years. On an even grimmer note the status of Huawei is a major question over “Free Trade”.

The idea that a CEO or CIO in London, Tokyo or New York is free to mouse click vast sums of money to wherever or whomever he wants is going to end and soon. If your money is in China when that happens good luck getting it back.
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