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Comparing Fidelity Int'l index funds

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  • Avatar Snag75 
    Participant
    Status: Physician
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    Joined: 12/09/2018
    Earnest refinancing bonus

    May seem like minutiae, but trying to see what I’m missing.  I’m comparing 3 international index funds with Fidelity, and the performance of all 3 look pretty much the same over the long haul, but for some reason FSGGX is rated as higher returns (and higher Morningstar rating) than FSPSX (and I guess FTIHX hasn’t been around long enough for the ratings?).  There are slight differences in ERs but that doesn’t seem to correspond with the ratings.  What am I missing?

    Hopefully this link works:
    https://www.fidelity.com/fund-screener/compare.shtml#!&fIds=FSGGX%2CFSPSX%2CFTIHX

    #197841 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4420
    Joined: 01/08/2016

    first, past returns dont matter.

    second, M* ratings are worthless, per M*.

    the ER are the same (essentially).

     

    whats your process for how to evaluate funds?

    FTIHX: most complete index

    FSGGX: no small, yes EM

    FSPSX: no small, no EM

    #197849 Reply
    Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018

    first, past returns dont matter.

    second, M* ratings are worthless, per M*.

    the ER are the same (essentially).

     

    whats your process for how to evaluate funds?

    FTIHX: most complete index

    FSGGX: no small, yes EM

    FSPSX: no small, no EM

    Click to expand…

    Could you please explain your above comments (except the ERs, I get that, hence my questioning the differences between the funds).

    Based on trends in the market over the years, they all literally look the same (and overall not as good as S&P over time).  This is as far as I’ve gone.

    [Note: currently shopping for new FA but in the meantime need to make choices about where my $$ sits — plus not sure how much we’d get into this minutiae, esp if I am paying by the hour, but either way won’t be for a while that we’d get this far]

     

    #197884 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3473
    Joined: 01/21/2016

    first, past returns dont matter.

    second, M* ratings are worthless, per M*.

    the ER are the same (essentially).

     

    whats your process for how to evaluate funds?

    FTIHX: most complete index

    FSGGX: no small, yes EM

    FSPSX: no small, no EM

    Click to expand…

    There are slight differences in fund composition, as pointed out above.

    FTIHX is the most diversified, including all size companies, developed and emerging markets. It is probably your best bet, but they are close enough, and in the end, it really does not matter much which you choose (as you have pointed out).

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #197898 Reply
    Avatar Sean 
    Participant
    Status: Physician
    Posts: 94
    Joined: 01/15/2016

    Would you recommend the int’l index fund(s) in a taxable or a tax-advantaged account?  Mine are in a 401k but I wonder if I shouldn’t move them to a taxable account instead.

    #197983 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4420
    Joined: 01/08/2016
    Would you recommend the int’l index fund(s) in a taxable or a tax-advantaged account?

    Click to expand…

    they can go in either one.

    while still efficient, technically intl is still less efficient than US even after the FTC.

    Mine are in a 401k but I wonder if I shouldn’t move them to a taxable account instead.

    Click to expand…

    if you have good options in your 401k then there is no reason.

    some dont have a choice and need to fill in the box somewhere else (like a rIRA or taxable).

    #198068 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4420
    Joined: 01/08/2016
    Could you please explain your above comments

    Click to expand…

    what specifically is your question?

    Based on trends in the market over the years, they all literally look the same

    Click to expand…

    yes they do.

    and overall not as good as S&P over time

    Click to expand…

    why would you compare an international index to a US index?

     

    #198069 Reply
    Liked by Lordosis, Tim
    Zzyzx Zzyzx 
    Participant
    Status: Physician
    Posts: 198
    Joined: 09/24/2018

    Price Still Slight

     

    Fidelity Global ex U.S. Index Fund

    • Annual Expenses: 0.06%
    • Fund vs. Index: +0.13%

    iShares Core MSCI Total International Stock ETF

    • Annual Expenses: 0.10%
    • Fund vs. Index: +0.21%

    Vanguard FTSE All-World ex-U.S. ETF

    • Annual Expenses: 0.11%
    • Fund vs. Index: +0.16%

    Vanguard Total International Stock ETF

    • Annual Expenses: 0.11%
    • Fund vs. Index: +0.19%

    Vanguard Total Stock Market ETF

    • Annual Expenses: 0.04%
    • Fund vs. Index: +0.04%

    It’s psychosomatic. You need a lobotomy. I’ll get a saw.

    #198136 Reply
    Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018

     

    Fidelity Global ex U.S. Index Fund

    • Annual Expenses: 0.06%
    • Fund vs. Index: +0.13%

    iShares Core MSCI Total International Stock ETF

    • Annual Expenses: 0.10%
    • Fund vs. Index: +0.21%

    Vanguard FTSE All-World ex-U.S. ETF

    • Annual Expenses: 0.11%
    • Fund vs. Index: +0.16%

    Vanguard Total International Stock ETF

    • Annual Expenses: 0.11%
    • Fund vs. Index: +0.19%

    Vanguard Total Stock Market ETF

    • Annual Expenses: 0.04%
    • Fund vs. Index: +0.04%
    Click to expand…

    Thanks for this.  Could you explain how to interpret the numbers?

    In my case I can only look at the Fidelity funds for most of my accounts.

    #198148 Reply
    Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018
    Could you please explain your above comments 

    Click to expand…

    what specifically is your question?

    What do you mean past returns don’t matter?  Doesn’t that give an idea of how well a fund performs (vs crystal ball)?  And then I didnt understand what you wrote about each fund and how “complete” they were — meaning, what does that mean in terms of investing in them or now?  More complete is always better?  I had considered that an international fund that did not include US as part of its “total” might make more sense for true diversification.

    and overall not as good as S&P over time

    Click to expand…

    why would you compare an international index to a US index?

    Click to expand…

    Wanted to see how the 2 types compare, like if int’l is more volatile or something, might give a better idea on how to evaluate how much to care about the slight differences I see between the int’l funds, as well as what %age is actually allocated there.  But both seemed steady and pretty consistent, S&P just slightly higher rate over time.

    #198158 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4420
    Joined: 01/08/2016
    What do you mean past returns don’t matter?

    Click to expand…

    they literally dont matter. you cant re-create the past. you dont need to look at them.

    you can hope to get a glimpse. you are shooting for a broad generalization: like stocks should outperform bonds. but even then i can show you a 10 year period where they dont.

    And then I didnt understand what you wrote about each fund and how “complete” they were

    Click to expand…

    so if we are talking international index, the most complete would hold every country possible at every size possible. so emerging markets, small, large, etc.

    two of those funds are missing pieces. like the s&p vs total US. one has 500*, the other has 3000 companies.

    Wanted to see how the 2 types compare

    Click to expand…

    one will win, then the other. but they are not technically the same enough to be apples:apples.

    #198162 Reply
    Liked by Snag75
    DMFA DMFA 
    Moderator
    Status: Physician
    Posts: 2136
    Joined: 06/24/2016

    For an index fund, all you need to know is:

    • Which index and what that means (i.e. US vs int’l, total vs just large/med/small, for int’l whether developed/emerging/both)
    • Correlation of fund to said index (ideally r² > 96%, as close to 1 as possible)
    • Expense ratio

    If r² is nearly 1, then you’re going to be chasing hundredths seeing if one out-performs the other.  Beta (volatility relative to the underlying index) will be nearly 1 and alpha (return greater than the underlying index) will be nearly 0 for each one.  You’re not trying to out-perform with an index fund; you’re going for “good enough.”

    One would argue including small and emerging would maximize diversification and therefore be more “complete,” hence the “total” qualification in the name.  On the other hand, you might try to separate out your components by having a separate small/emerging fund, aka “tilting” or “slicing and dicing.”  It’s not necessarily superior to do so.  I don’t know that having 30% int’l small and 30% emerging will be better or worse than just a total int’l index over any given time frame.  There might not even be signal in the noise.

    You are getting into the weeds.  The minutiae are not important.  At your knowledge/experience level, I’d stick with “total” funds (FSKAX, FTIHX) until you figure out how much the components mean to you and if you want to tinker with that balance.  It’s not wise for the uninitiated to try to pioneer a new portfolio theory.  If you want to “chase alpha,” i.e. try to maximize all returns as possible, then you will need to spend more in fees (such as funds with ERs > 1% or with an AUM advisor) and unbalance your portfolio, leaving you susceptible to concentration risk.  This is demonstrated again and again *not* to be superior to taking the index.  Top fund managers can’t routinely beat the index year-in, year-out, and they get your money regardless.  If their quantitative analysts can’t nail down a consistently-winning formula, then neither can I, and neither can you.  So I’ll go with “good enough is good enough.”

    "I like money." - Frito Pendejo (Idiocracy)

    [Not a financial professional (yet), lawyer, or employee of The White Coat Investor]

    #198170 Reply
    Avatar Perry Ict 
    Participant
    Status: Physician
    Posts: 61
    Joined: 01/20/2019

    I agree with what peds says about past returns to gauge the future.  Actually, taking it a step further, there are some investors that basically do the opposite of what you might think – they invest in the worst performing funds and stay away from the best performing funds, with the thought that eventually everything reverts to the mean (ie what has done best in the past will perform worst in the future, and what has performed worst in the past will perform best in the near future).  Not that I’d recommend such a strategy, since you can lose a lot of money trying to do that if you don’t have a good understanding and a solid system to pick out such funds.

    But anyway, the bottom line is not to assume past returns will tell you what you will make going forward.

    #198240 Reply

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