In case you haven’t noticed, international stocks are handily outperforming U.S. stocks in 2017, which makes now a good time to look at the best Vanguard funds that can take advantage of an international rally.
Why Vanguard? It’s hard to beat high-quality, low-cost funds and Vanguard is the leader in this category. As for international stock funds, there are many different flavors to choose from at Vanguard, including emerging markets, European stocks and total international stock funds, to name just a few.
So now that international stocks have the momentum in 2017, our investment decision revolves around which Vanguard international funds are best for the current environment.
But with that said, Vanguard investors aren’t generally the type to jump into a specific area of the market with the idea of jumping back out a few months down the road. Therefore our spotlight will be on three best Vanguard funds for an international rally in 2017, but also ones that can make solid long-term holdings.
Best Vanguard Funds for an International Rally: Vanguard International Explorer (VINEX)
Expenses: 0.41%, or $41 annually per every $10,000 invested
Minimum Initial Investment: $3,000
Investors looking for an aggressive-growth international stock fund will like what they see in Vanguard International Explorer (MUTF:VINEX).
VINEX invests primarily in developed markets, but the higher relative risk and potential for higher returns comes from the focus on smaller overseas companies like Nippon Shinyaku Co. Ltd. (OTCMKTS:NPPNY), Ubisoft Entertainment SA (OTCMKTS:UBSFF), and Anima Holding (OTCMKTS:ANNMF).
Since the portfolio only holds about 10% emerging markets stocks and the extra growth potential comes from small- and mid-cap international stocks, it’s possible that VINEX is in the sweet spot of risk and return for 2017 and for the long run.
Best Vanguard Funds for an International Rally: Vanguard Total International Stock Index (VGTSX)
Expenses: 0.18%
Minimum Initial Investment: $3,000
If you want to take advantage of a rally for international stocks but still keep an eye for the long-term with a low-cost, diversified index fund, you won’t likely find better than Vanguard Total International Stock Index (MUTF:VGTSX).
VGTSX passively tracks the FTSE Global All Cap ex US Index, which covers the entire stock market outside of the U.S. This means shareholders get access to more than 6,000 international stocks.
The index is cap-weighted, which means top holdings are international large-caps like Nestle (OTCMKTS:NSRGF), Samsung (OTCMKTS:SSNLF), and Royal Dutch Shell (OTCMKTS:RYDBF), but the VGTSX portfolio also includes small- and mid-cap international stocks.
Best Vanguard Funds for an International Rally: Vanguard International Growth (VWIGX)
Expenses: 0.46%
Minimum Initial Investment: $3,000
A great way to ride the rally in international stocks is to buy shares of a fund like Vanguard International Growth (MUTF:VWIGX).
VWIGX is an actively-managed fund that focuses on international companies that have above-average earnings growth in both developed and emerging markets. Therefore, shareholders get exposure to fast-growing international stocks like Tencent Holdings Ltd (OTCMKTS:TCEHY), Alibaba Group Holding Ltd (NYSE:BABA) and AIA Group Ltd. (OTCMKTS:AAGIY).
This international stock fund from Vanguard has jumped 25% year-to-date and ranks ahead of 90% of category peers in the short-term and in the long-term for annualized returns.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities, although some of his client accounts hold VGTSX. Under no circumstances does this information represent a recommendation to buy or sell securities.
