The reason why emerging market funds have historically done so well is that they were primarily invested in small cap stocks. However over the past decade or so the stocks in these funds may come from emerging market countries like China, India, Brazil etc, but they have increasingly been larger and larger companies.
I know things like a stronger USD, and the fall in oil prices have done a lot to dampen emerging market funds as of late but I feel that the return in these funds will not be what they once were due to the increasing trend of these becoming larger capitalization stocks.
My way of combating this is the Vanguard ETF called VSS http://ift.tt/2hUv4mE
The foreign part of my portfolio contained a mixture of VWO and VGK, however, I am thinking of switching to VSS as it adds small cap stocks with foreign exposure.
I believe that VSS will outperform over the long term if we take into account past history.
Sample Vanguard ETF portfolio.
30% VOO (S&P 500 CORE) 25% VBR (SMALL CAP VALUE) 25% VYM (Large Cap Value) 20% VSS (Foreign Small cap)
While this portfolio is not for the faint of heart, it contains the 3 asset classes that have historically done the best in the US over the past 100 years with some foreign small cap exposure thrown in for some diversification and hopefully excessive returns.
Thoughts?
Submitted January 05, 2017 at 07:47AM by MedicalLabScientist http://ift.tt/2ierDU5
