In our ongoing coverage of Vanguard funds, we now turn the spotlight on Vanguard international income funds.
Although international investing tends to involve greater market risk compared to the U.S. market, investors can potentially be rewarded with long-term returns and high yields. Investors looking for international income funds are typically looking for sources of income as an alternative to or supplement for U.S. income funds.
We’ve already covered Vanguard international funds, but we’ve carved out a special feature of Vanguard’s selection of international income funds, which includes a diverse range of five choices, including an REIT fund, two dividend funds and two bond funds.
Vanguard International Income Funds
Vanguard Global ex-U.S. Real Estate Index (MUTF:VGXRX): This international income fund from Vanguard focuses on real estate stocks and real estate investment trusts, commonly referred to as REITs, in countries outside of the U.S. International stocks in the real estate sector can add diversity to a portfolio while providing a source of steady income from dividends. Top holdings include the likes of Mitsubishi Estate Co. Ltd. (OTCMKTS:MITEY) and Unibail-Rodamco SE (OTCMKTS:UNRDY). VGXRX charges a fee of 0.25% on both purchases and redemptions. The expense ratio is 0.35%, or $35 for every $10,000 invested.
Vanguard International Dividend Appreciation Index (MUTF:VIAIX): Investors looking for low-cost exposure to high quality international stocks that pay dividends will want to take a close look at VIAIX. This fund tracks the Nasdaq International Dividend Achievers Select Index, which consists of about 240 non-U.S. stocks of all market caps that have consistently increased dividends in the past. VIAIX charges a fee of 0.25% on both purchases and redemptions. The expense ratio for VIAIX is 0.35%.
Vanguard International High Dividend Yield Index (MUTF:VIHIX): Vanguard’s VIHIX is an index fund that tracks the FTSE AW ex US High Dividend Yield Index, which is a market cap weighted index consisting of stocks of companies located in developed and emerging markets that are expected to pay above-average yields from dividends. VIAIX charges a fee of 0.25% on both purchases and redemptions. The expenses for VIHIX are 0.42%.
Vanguard Emerging Markets Government Bond Index (MUTF:VGOVX): Investors looking for high yields and diversification through international bonds will want to consider VGOVX as an addition to their portfolio. This index fund holds bonds issued by governments in emerging markets. This type of foreign exposure adds risk but the current yield of 4.06% may be worth the risk for some investors. There is a purchase fee of 0.75%, and expenses for VGOVX are 0.49%.
Vanguard Total International Bond Index (MUTF:VTIBX): Vanguard’s VTIBX is a smart choice for investors looking for fixed income through low-cost, broad exposure to international bonds. This international income fund tracks an index of over 4400 bonds that include government and corporate issues from developed and emerging markets. The expense ratio for VTIBX is 0.15%.
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.