Gyroscopic Investing

Thoughts on holding 5% of VWO with the remaining 20% to S&P 500 index?  As opposed to VEU or any other general Int'l index fund.

I would rather hold frontier instead of emerging.  Emerging already had its big gain run a long time ago.

Personally, I'm fine with a 50%/50% split between broad domestic and international.

I just blogged about this:

https://web.archive.org/web/20160324133 ... g-markets/

Personally I don't specifically single out emerging markets as an investment. I just don't trust them. As part of a diversified international fund they are fine.

If you want an all in one find, you could check out Vanguard Total World. It holds everything and you won't have to touch it to rebalance.

I've never sliced and diced into emerging markets.

It was kind of painful listening and reading today about the Berezovsky-Abramovich lawsuit. I know there's money to be made in Russia (in, say, Gazprom), but when I read cases like this, or when Chavez decides to nationalize something that was once the property of a foreign corporation, I just head for zee hills. I don't even own a very big stake of Vanguard's international index. I hope it's mostly Nestle and Mitsubishi.

MachineGhost wrote: I would rather hold frontier instead of emerging.  Emerging already had its big gain run a long time ago.

Personally, I'm fine with a 50%/50% split between broad domestic and international.

Correct me if I'm wrong, but haven't "frontier markets" (MSCI FM index) more or less underperformed ordinary "emerging markets" (Vanguard EM fund) from the start of 2008 to the present? Do you think they will outperform enough (or be non-correlated enough) in the future to make up for it and is that why you'd choose them over EM if forced to pick one?

Please look at the composition of frontier market indices before investing:

http://en.wikipedia.org/wiki/Frontier_markets

Not saying they aren't great places to visit, but the governments and business practices are likely extremely corrupt. Not to mention massive currency risks.

I think it is important to realize just how much emerging market exposure the PP already gets via the gold portion. Gold prices in our currency are massively influenced by the relative prosperity of people in the major gold buying countries such as India, China and elsewhere in Asia. There's something about all of that in:
"Emerging Consumers Drive Gold Prices: Who Knew?" in http://www.gmo.com/America/GMOInsights/

That said I do hold a bit of emerging market stocks in my UK based PP. Anyway, if you look at the UK FTSE 100 (or AIM), it actually is not really an index of UK companies. It is full of companies that only choose to list in London and in fact are Kazhak or Mexican or whatever.

D1984 wrote: Correct me if I'm wrong, but haven't "frontier markets" (MSCI FM index) more or less underperformed ordinary "emerging markets" (Vanguard EM fund) from the start of 2008 to the present? Do you think they will outperform enough (or be non-correlated enough) in the future to make up for it and is that why you'd choose them over EM if forced to pick one?

I was speaking of the long-term, i.e. 20-30 years.  The compounding effect would be enormous, but I wouldn't go past 5% which seems to be the minimum weight necessary to have an effect on an overall portfolio.

But as craigr mentioned, you got to be real careful about the composition of emerging ETF's.  Most of them are too overweight to one country or region.  I think only one ETF actually passed muster last time I looked at them.