Vanguard International Growth Fund
From Bogleheads
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| Company: | Vanguard |
|---|---|
| Fund category: | International Stock |
| Benchmark: | MSCI EAFE Index |
| Start date: | 09/30/1981 |
| Expense ratio: | 0.47% |
Vanguard International Growth Fund is an actively managed international growth fund, benchmarked inappropriately to the MSCI EAFE index. According to the fund's prospectus:
The Fund invests predominantly in the stocks of companies located outside the United States. In selecting stocks, the Fund’s advisors evaluate foreign markets around the world and choose companies considered to have above-average growth potential.
The Fund Holdings page on the Vanguard website reports that as of 11/30/2008, the fund invests in 169 stocks, while the benchmark index includes 990.
Contents |
Management
The fund is managed by three distinct investment managers, whose starting dates and assets under management are given in the table below (as of the close of the 2008 fiscal year):
| Firm | Starting Date | Assets |
| Schroder Investment Management North America, Inc. | 1981 | 50% |
| Baillie Gifford Overseas Ltd. | 2003 | 40% |
| M&G Investment Management Limited | 2008 | 7% |
| Cash | - | 3% |
Additional details on the managers are available at Management
Share Classes
Two share classes are available to individual investors:
- Investor (VWIGX), with an expense ratio (ER) of 0.47% and an initial minimum investment of $3,000
- Admiral (VWILX), with an ER of 0.28% and a minimum investment of $100,000, except $50,000 suffices for conversion of an Investor Shares account in existence 10 years
There are no Signal, Institutional or ETF share classes.
Advantages
Vanguard does not have an index fund for international growth. The fund's expense ratio of 0.47% is one third of the average international stock fund expense ration of 1.48%. The fund paid brokerage commissions of $18,803,585 in fiscal year 2007. This produced a Commission Ratio (CR) of 0.116% for the year. (Fiscal year 2008 figures are not yet available). [1]
Criticisms
Active Management
This fund uses active management. Passive funds in the international growth asset class include iShares MSCI EAFE Growth Index Fund (EFG) which is an ETF with an expense ratio of 0.40%.
Stock Selection Risk
This fund invested in 167 stocks as of August 31, 2008. The comparable ETF iShares MSCI EAFE Growth Index Fund held 546 stocks as of August 29, 2008.
Performance
This historical returns webpage provides the fund's performance. The fund's investor share class has been in existence since September 1981. Since inception through 6/30/2008 it has had an average annual return of 12.53%. During the 2000-2002 bear market, the fund lost a total of 39%, as compared to the MSCI EAFE's loss of 43% during the same period.
The webpage also provides VWIGX results for each of the last 15 calendar years. During this 1993-2007 period, the fund had an average annualized return of 11.08%. Its best calendar year result was +44.74% (1993), and its worst was -18.92% (2001).
According to Vanguard, the fund's bogey:
Tracks more than 1,000 stocks from more than 20 developed markets in Europe and the Pacific Rim. MSCI EAFE Index returns are adjusted for withholding taxes applicable to Luxembourg holding companies.
Over the 1993-2007 epoch, the benchmark achieved an average annualized return of 9.56%. Its best calendar year result was +38.59% (2003), and its worst was -21.44% (2001).
Vanguard Institutional reports updated three year standard deviations of monthly returns. This measure of return volatility shows the fund had a 20.65% standard deviation compared to the 19.10% standard deviation of the benchmark as of 11/31/08.
Tax Efficiency
The fund has not been tax efficient. See Vanguard International Growth Fund Tax Distributions for detailed data.
History
Inception dates of the various share classes are as follows:
- Investor: 09/30/1981
- Admiral: 08/13/2001
The fund's fiscal year ends on 8/31 of each year.
Notes
[1] Comparative benchmarks for brokerage commission expense are not readily available. In a 2004 ZAG commissioned study, "Portfolio Transactions Costs at U.S. Equity Mutual Funds" authors Jason Karceski, Miles Livingston, and Edward S. O'Neal, found that in 2002, international funds paid an average commission of 0.456%; emerging market funds paid 0.609%. The weighted dollar commissions (what investors actually held) produced a weighted commission of 0.259% for international funds, and 0.399% for emerging market funds.
Lipper, in a 2004 study, Mutual Fund Trading and Portfolio Transaction Costs, found that the average weighted commission paid by international stock funds was 0.222% in 2003, with a range of expense between 0.00% and 4.796%.
See also
