# International Allocation



## Belguy (May 24, 2010)

Currently, I have 6 per cent of my portfolio allocated to International investments--primarily in VEA. I plan to increase this to 10 per cent or even to 20 per cent.

I also currently have 9.5 per cent allocated to emerging markets via VWO. I plan to reduce this to a 5 per cent allocation.

I plan to split my international investments between VEA, Mawer Intl., and Mawer Global Small Cap.

https://personal.vanguard.com/us/funds/snapshot?FundId=0936&FundIntExt=INT

http://www.mawer.com/mutual-funds/fund-profiles/mawer-international-equity-fund/

http://www.mawer.com/mutual-funds/fund-profiles/mawer-global-small-cap-fund/

Any thoughts would be appreciated.


----------



## mrPPincer (Nov 21, 2011)

The first thing I look at is expense ratio.
I don't understand why any couch potato investor would invest in an actively managed fund with a 1.53% MER.
It only holds 59 equities, which means greater diversification risk, and it's 6% cash right now, which means you only get 94% equity exposure, more or less, depending on the whims of the manager.
The fact that it's actively managed also means there will be higher hidden transaction costs than an index fund that you won't see in the MER.

VEA on the other hand has the diversification of 870 stocks, and a miniscule 0.10 MER.


----------



## mrPPincer (Nov 21, 2011)

The Mawer small cap has a 1.88% MER.
Why not look at a Vanguard small cap?


----------



## CanadianCapitalist (Mar 31, 2009)

Once upon a time there lived a farmer who wanted to grow a mighty oak tree on his property to provide him with shade and maybe even timber that he could sell if necessary. He planted an oak seed, watered it and protected it from squirrels. A year passed and the farmer looked at the little sapling and wondered why it wasn't bigger. He pulled it up to check the roots, planted it back again and kept fretting. Another year passed and the farmer was still unhappy with how the oak tree was coming along. It is far too small still he thought. Maybe I should have planted a different oak variety that grows faster he thought. In the third year, the farmer is still not happy. The poor oak tree is far too small for his liking and the farmer had waited three years. He pulls it up and plants a maple tree instead...


----------



## Ponderling (Mar 1, 2013)

Taylor North American Opportunities fund, part of Bropton Group, I think. This has been a good play into the US for me for almost a year now.

This is an actively managed closed ended mutual fund. I actully bought it from IPO, which is usally a no-no, but this time has turned out well.

The manager is value investor with a good long term track record in funds he has previously managed. 

I have also considered Mawer, but not bought them so far.

I am also in one called TD Global Low Volatility. I am with an advisor so I have the F class. The A class had high mers, and both have a higher than normal ter.
The performance has so far been a good, but not stunning, plow though international markets with a quant strategy to try to clip the peaks and not incur losses. An easy one to sleep on. 

You seem way low on where your money is allocated. 
I think I am climbing over 50% with my equties out of Canada presently.
I don't see the domestic scene with as much up side potential at present relative to the oppertunities in the right places in the USA, and further abroad.


----------



## Sampson (Apr 3, 2009)

CC is starting to speak in fables. This must be a sign of something. Maybe we can trade based on this new trend.

I think it is important to keep the ship's direction constant, whether that is optimal or not, you do face problems if you are constantly adjusting your allocations. I personally think your current exposure (15.5%) to non-North American equities is far too low.


----------



## andrewf (Mar 1, 2010)

More of a parable. I think CC might as well be talking to a brick wall, in this case.


----------



## CanadianCapitalist (Mar 31, 2009)

I think Belguy is talking about his total portfolio allocation, not just the equity part. If Belguy has 50 percent in fixed income, it means he has 31 percent of his equity allocation in stocks ex USA and Canada. That sounds appropriate though one could quibble about the portion allocated to developed markets versus emerging markets.


----------



## Four Pillars (Apr 5, 2009)

Nice one CC!

I think Belguy is just making conversation.


----------



## Sampson (Apr 3, 2009)

andrewf said:


> More of a parable.


There's many a smart a$$ here at CMF.

I think many of us have already commented on this thread.

I think you may be right CC, about Belguy's total portfolio allocation vs. just the equities portion. If that's the case, keep 'er steady as she goes (VWO and VEA) and forget about all the hype behind the Mawer funds (there have been a few threads about these hot shots lately).


----------



## Belguy (May 24, 2010)

Four Pillars said:


> Nice one CC!
> 
> I think Belguy is just making conversation.


There is quite a bit of truth in this statement. After all, this is a forum where various ideas are discussed.

Forum: Any public meeting place for open discussion.

And besides, I enjoy chatting with you folks.:encouragement:eaceful::untroubled::eagerness:

Also, CC oftens alludes to the need to remain patient when investing. I am now 70 years old and my time for patience is quickly running out!!!


----------



## Sampson (Apr 3, 2009)

Belguy said:


> I am now 70 years old and my time for patience is quickly running out!!!


But so is your need to grow your money.

Your age and position in life is precisely are reason to not change strategies. It may take years for the new allocations to provide benefit, yet in the short term, costs associated with changing and the timing could negatively impact your monies.


----------



## andrewf (Mar 1, 2010)

Sampson said:


> There's many a smart a$$ here at CMF.


I deserve that!


----------



## Belguy (May 24, 2010)

Sampson said:


> But so is your need to grow your money.
> 
> Your age and position in life is precisely are reason to not change strategies. It may take years for the new allocations to provide benefit, yet in the short term, costs associated with changing and the timing could negatively impact your monies.


Keep in mind that I am not exactly talking about completely shaking up my portfolio but just tweaking my asset allocation because I am currently too heavily invested in Canadian equities and want to move some over to the international side. At $6.95 per trade times three or four trades, I'm not exactly going to break the bank. I am a long term buy-and-hold investor and usually only trade for rebalancing purposes or, in this case, to adjust my geographical allocation for what I perceive to be valid reasons. The majority of my allocation will remain unchanged.

Buy, hold, rebalance and reallocate as needed, and prosper.:tranquillity::wink::cool2:


----------



## Sampson (Apr 3, 2009)

But what is the purpose of adjusting your allocations?

Rebalancing is one thing, but shifting allocations should come with a reason. Gaining stability (lower deviation) in a portfolio for a retiree like yourself should probably come from shifting out of equities and not changing geographical distribution.

I could rephrase your question as:

Would tactical asset allocation (shifting away from Canadian markets that have performed excellent over 20 years, and moving into 'international' equities markets) be useful for me and my present portfolio?

If phrased like this, the obvious questions would be, why are you leaving Canadian equities?


----------



## Belguy (May 24, 2010)

Why invest in international equities:

https://www.edwardjones.ca/groups/ejw_content/@ejw/@ca/@graphics/documents/web_content/web222399.pdf


----------



## kcowan (Jul 1, 2010)

The fundamental question Belguy posed was he is considering dropping emerging for 9.5% to 5% and increasing International to 10% or maybe 20%.

Why are you abandoning Emerging markets?
What attraction do you see in International?

Give us some context so we can answer you! I am not looking for Edward Jones response. I want your response.


----------



## Belguy (May 24, 2010)

I am reducing my emerging markets exposure on the advice of CC who suggested that my 10 per cent target was too high. CC always knows what he is talking about and so I always listen to what he says..:encouragement::cool2::eagerness::wink:

By the way, Edward Jones knows more than I do.


----------



## CanadianCapitalist (Mar 31, 2009)

Uh-oh. Belguy, you shouldn't take financial advice blindly from anyone. If you are going to DIY at all, you should have a better rationale for making major asset allocation changes.


----------



## Belguy (May 24, 2010)

But would I really be making "major asset allocation changes"? All that I am doing is reducing my Canadian equity allocation a tad and changing my emerging markets allocation from ten per cent to five per cent and redirecting those monies to international equities where I currently feel that I am underweighted.

Yet, I am made to feel like I am committing some major portfolio management crime in the process.

What exactly is the problem here? Once set, is a person's asset allocation frozen for all time? I am making these slight tweaks to my portfolio because:

(1) I feel that I am currently too overweighted in Canadian stocks which I feel will not do as well in the future.

(2) I want to reduce my emerging markets allocation in light of my advancing age and want to become a little less aggressive.

(3) I am underweight in international equities and so want to add to my position there.

So, what exactly is the problem here considering that I very rarely make any changes to my asset allocation? What if I promise to never, ever make any more changes to my allocation in the future? Would that alleviate any concerns?

Jeez!!!!:bi_polo::culpability::topsy_turvy::hypnotysed:


----------



## eulogy (Oct 29, 2011)

I'd give VXUS a try if you're willing to turn your money into US Dollars. It holds over 6000 international stocks (7-8% is Canadian) and MER of 0.16%.

If you're not interested in the US dollar stuff, maybe try iShares XWD holding 1510 international stocks (no Canadian) and a MER of 0.46%.


----------



## Sampson (Apr 3, 2009)

Belguy, there is no problem with you considering the changes. You have listed your reason, so if you believe in them, follow you conviction.

You asked for opinions and I think most people are saying it is either unnecessary or unwise. If you ask on an open forum, don't feel disappointed if people disagree.


----------



## kcowan (Jul 1, 2010)

Belguy said:


> By the way, Edward Jones knows more than I do.


Jones knows nothing about your priorities. That is the point of this discussion.

I agree that investing in Emerging markets will expose you to more volatility and that may be undesirable for a person of your status.


----------



## Eclectic12 (Oct 20, 2010)

Belguy said:


> ... I am made to feel like I am committing some major portfolio management crime in the process. So, what exactly is the problem here considering that I very rarely make any changes to my asset allocation? What if I promise to never, ever make any more changes to my allocation in the future? Would that alleviate any concerns?
> 
> Jeez!!!! ...


In a nutshell - it would seem you want something close to consensus agreement for a proposed change with almost no info. IMO, that's not likely on a public board that's full of people with strong opinions.

In addition, for whatever reason you seem overly sensitive to those who disagree and/or are asking for more info. Part of DIY is to sift through the info and make your own decision.


Cheers


----------



## Belguy (May 24, 2010)

Me bad.:hopelessness::sour::disgust::miserable:


----------



## CanadianCapitalist (Mar 31, 2009)

Belguy said:


> (1) I feel that I am currently too overweighted in Canadian stocks which I feel will not do as well in the future.
> 
> (2) I want to reduce my emerging markets allocation in light of my advancing age and want to become a little less aggressive.
> 
> (3) I am underweight in international equities and so want to add to my position there.


(2) and (3) are good reasons. (1) is not.


----------



## Jagas (Feb 11, 2013)

I target an international allocation of 20% and am probably sitting somewhere closer to 19% currently, which is admittedly meaningless to anyone other than myself. I use VXUS for my entire international component. I know close to nothing about anything which holds even more true for International equities, so I wanted a one stop solution and have been happy with this decision so far.


----------



## Belguy (May 24, 2010)

CanadianCapitalist said:


> (2) and (3) are good reasons. (1) is not.


Two outa three ain't bad.:encouragement::tongue-new::untroubled::encouragement:

I have heard so many professional money managers on BNN say that they are lowering their Canadian equity allocation going forward. Thus, I am not alone in my assessment of the situation.

Let's meet back here in ten years and compare the results from the TSX, which represents a tiny portion of world equity markets, to results from an international fund that invests all over the world.

Let me change my reasoning for lowering my Canadian equity exposure. I don't want to have too many eggs in one basket.


----------



## Belguy (May 24, 2010)

How do you like my new portfolio idea:

50 per cent VTI
50 per cent VXUS

The latter gives you all of the exposure to the TSX that it deserves.

You are invested in a humungous number of stocks for an extremely low fee. What's not to like?:encouragement::cool-new::congratulatory::eagerness:


----------



## mrPPincer (Nov 21, 2011)

Belguy said:


> What's not to like?


You asked,
VXUS is a US-based etf that holds Canadian stock, that small portion will be taxed on it's dividends at a 15% US withholding tax along with the rest.
It seems a lot of people think that's not a big deal considering that the Canadian portion is small, and VXUS does hold a lot of small cap.
If you want to keep it really simple, might not be a bad idea, dunno,

but if there's any tax considerations in your situation some higher percentage of Canadian stock could be better.

I don't watch the news much so I don't know why you are so suddenly bearish on Canadian stock, seems to me like it's already been punished atm..

Anyways, best of luck


----------



## Belguy (May 24, 2010)

Most of my investments are registered. I will pay the piper when I start withdrawing from them next year when I turn 71. Ugh!!!:distress::upset::cower::frown:


----------



## Squash500 (May 16, 2009)

Belguy said:


> Most of my investments are registered. I will pay the piper when I start withdrawing from them next year when I turn 71. Ugh!!!:distress::upset::cower::frown:


 Belguy you don't have to withdraw the funds....just transfer them to a RRIF.


----------



## mrPPincer (Nov 21, 2011)

Same thing, i have already have changed my rsp to a rif over a year ago, and once it's a rrif you must begin to withdraw, no choice.
My withdrawals are small, so no big deal for me.


----------



## Sampson (Apr 3, 2009)

Belguy said:


> I have heard so many professional money managers on BNN say that they are lowering their Canadian equity allocation going forward. Thus, I am not alone in my assessment of the situation.


This, in my view, would be called market timing, and you online persona/attitude towards this is very clear.

Don't go chasing.


----------



## 6811 (Jan 1, 2013)

Squash500 said:


> Belguy you don't have to withdraw the funds....just transfer them to a RRIF.


Most of my investments are also registered but I am already working at converting a portion of my RRSPs to a RRIF (I'm 63 and recently retired). I've nearly completed a book by Daryl Diamond, "Your Retirement Income Blueprint" that has really clarified my thinking on the subject. Among other things he outlines some good strategies for lessening the blow of income tax on RRIF withdrawals. Though it may be a bit late for you, Belguy, to implement I recommend it for anyone getting close to retirement.


----------



## Belguy (May 24, 2010)

I realize now that I should have listened to some of those who suggested looking at an early conversion of an RRSP to a RIF or a combination of a RIF and an annuity.

We grow too soon olde and too late schmart.

This is an example of where soliciting the help of a professional retirement and tax expert might be worth the fee.

Oh, well, when I am 90, I will be bringing in a pretty good income most of which will go to the nursing home fees.:distress::upset::frown::dispirited:

Pick and choose your international ETF's:

http://money.usnews.com/funds/etfs/rankings/international-funds

Any thoughts?


----------



## Eclectic12 (Oct 20, 2010)

Belguy said:


> I realize now that I should have listened to some of those who suggested looking at an early conversion of an RRSP to a RIF or a combination of a RIF and an annuity.
> 
> We grow too soon olde and too late schmart.
> 
> This is an example of where soliciting the help of a professional retirement and tax expert might be worth the fee ...


Question is would the pro be recommending the early conversion as well?

With the number of relatives who use pros and have retired - I would have thought I'd have heard of this option long ago. I've read far more on CMF than I've heard from other sources. Not that it's a scientific survey or anything ... :biggrin:


Cheers


----------



## My Own Advisor (Sep 24, 2012)

@6811,

Diamond's book is great and I intend on doing the same thing, transferring part of RRSP to a RRIF in my 60s. When I get there.


----------



## Belguy (May 24, 2010)

My Own Advisor said:


> @6811,
> 
> Diamond's book is great and I intend on doing the same thing, transferring part of RRSP to a RRIF in my 60s. When I get there.


Would you consider putting part of it in an annuity?


----------



## My Own Advisor (Sep 24, 2012)

Not at these rates, for me in my 30s.

http://www.lifeannuities.com/articles/2013/annuity-rates-canada-2013.html

Maybe as you approach 75 or 80, it could be OK, if you have no fixed-income already.


----------



## 6811 (Jan 1, 2013)

My Own Advisor said:


> Not at these rates, for me in my 30s.
> 
> http://www.lifeannuities.com/articles/2013/annuity-rates-canada-2013.html
> 
> Maybe as you approach 75 or 80, it could be OK, if you have no fixed-income already.


+1


----------



## Belguy (May 24, 2010)

Any thoughts on the BMO International ETF, hedged or unhedged:

http://www.etfs.bmo.com/bmo-etfs/performance?fundId=72054

http://www.bmo.com/home/personal/ba...nd/price-and-performance?params=0&pch=mf01_en

Is there any advantage when compared to XIN:

http://ca.ishares.com/product_info/fund/performance/XIN.htm

Or is this really just a dart throwing exercise?


----------

