3 Best Vanguard Funds for International Stock

Vanguard funds are best known for their U.S. equity index mutual funds, but they also offer a handful of stellar international stock funds.

vanguard-logo-185Although the Greek debt crisis and a recent slide in Chinese stocks may be shining a negative light on foreign and emerging markets now, it’s never a bad time for long-term investors to hold a high-quality, low-cost international stock fund as part of a smart, diversified portfolio.

And, if you’re looking to add international stocks to your portfolio now, the short-term dip can make for good timing in buying shares at lower prices, or beginning a dollar-cost-averaging approach into a solid fund.

In total, Vanguard offers about a dozen international stock funds. With one eye on short-term developments in global markets and the other eye on long-term strength, we highlight three of the best Vanguard funds to buy now for international stocks.

Best Vanguard Funds for International Stock: Vanguard Total International Stock Index (VGTSX)

Expenses: 0.22%, or $22 annually per $10,000 invested
Minimum Investment: $3,000

Vanguard Total International Stock Index (VGTSX) is the quintessential international stock mutual fund.

VGTSX is a cap-weighted index fund that offers investors a low-cost way to gain broad exposure to more than 5,000 stocks in both developed and emerging international economies.

In intermediate to short-term periods (i.e., five years or less) the performance of VGTSX rarely beats the category averages, but the rock-bottom expense ratio of 0.22% creates a performance tailwind for longer periods, as evidenced by the 10-year and 15-year returns that are beating the majority of international stock funds.

For investors with taxable accounts, the low turnover, which is typically less than 5% of the portfolio per year, keeps a lid on those pesky capital gains distributions.

Best Vanguard Funds for International Stocks: Vanguard International Explorer (VINEX)

Expenses: 0.4%
Minimum Investment: $3,000

If you want to get a little more aggressive with small- and mid-cap international stocks, Vanguard International Explorer (VINEX) is one of the best funds you can buy.

The smaller capitalization adds more market risk, but the long-term returns can pay off for patient investors. For example, the 10-year return of 6.9% for VINEX significantly outpaces the 5.1% of MSCI EAFE Index and the 15-year return of 6.3% more than doubles that of the index at 3%.

In true Vanguard fashion, the expense ration of 0.40% is 74% lower than the average expense ratio of funds with similar holdings.

Best Vanguard Funds for International Stocks: Vanguard Global Minimum Volatility (VMVFX)

Expenses: 0.3%
Minimum Investment: $3,000

Vanguard Global Minimum Volatility (VMVFX) is the newest addition to Vanguard funds lineup for international stocks, but it is already among the best in its category.

Technically, the fund is part of the world stock category, which means it also invests in U.S. stocks. The VMVFX portfolio recently held 55% of its assets in North America, which is nearly identical to the MSCI ACWI Index with a 54% allocation.

The remainder of the portfolio is split almost evenly between Europe and Greater Asia. The average market capitalization is mid-cap, although there’s a healthy mix of large-, mid- and small-cap stocks in the portfolio.

To reduce volatility, according to Vanguard, “the fund will consider stocks’ risk and diversification characteristics and seek to hedge away most of the currency exposure resulting from its foreign stock holdings.”

Since it’s inception in December 2013, Vanguard Global Minimum Volatility has been a leader in the world stock category with performance highlighted in the 1-year return of 11.1%, which beats 99% of all world stock funds, the average of which had a -1.5% return over the past year.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm on Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/07/3-best-vanguard-funds-international-stock-vgtsx-vinex-vmvfx/.

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