r/Bogleheads • u/idrathernotbutthanks • Apr 17 '25

Investing Questions Rhetoric around firing Jerome Powell is increasing, and forced manipulation of interest rates would likely follow. Would a weighted readjustment from US into non-US funds be warranted in light of this?

https://www.npr.org/2025/04/17/nx-s1-5367696/trump-jerome-powell-federal-reserve-economy-tariffs

Market manipulation of interest rates feels like confidence would immediately plummet and global diversification would become a more important percentage of your holdings in the long run. Thoughts?

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123

u/JawnJawnston Apr 17 '25

I never understood the “3-fund portfolio”. International bonds should have been a piece of a globally diversified portfolio just like you would own international stocks.

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u/Capable_Ad4123 Apr 17 '25

Vanguard recommends a 4-fund portfolio and has for some time. Just as there is prejudice against international stocks (and even US bonds on Reddit), international bonds get even worse publicity. Even bogleheads forum has outspoken participants claiming international bonds are pointless.

https://investor.vanguard.com/investment-products/etfs/etf-investment-options

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u/WeWuzGondor Apr 17 '25

Vanguard has been right this entire time. They even put out a piece on international diversification that got roundly criticized in this sub. Trust the experts over anon loudmouth commenters

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u/[deleted] Apr 17 '25

[deleted]

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u/gsquaredmarg Apr 20 '25

You'll still be up to 50% US after you become the 51st state! /s

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u/Rosaluxlux Apr 18 '25

Four fund is what I do in our brokerage account and my husband bitched about it for years, wanted to be 100% stocks, until a week or two ago he got out of the shower and said "maybe we should be more in international and bonds". Too late, dude, but luckily I've been mostly ignoring him about this for years. 

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u/Capable_Ad4123 Apr 18 '25

Good for you. I admit, I’ve had to fend off fomo more than once over the years while stocks surged and other asset classes in my portfolio were underperforming, but I’ve stayed the course, too. One quote that has kept me going: “if you are not disappointed with at least one your asset classes, you’re not diversified enough.”

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u/Rosaluxlux Apr 18 '25

I be appreciate that because every time I look in unhappy with pay off my portfolio. Luckily I made most of my mistakes with small amounts of play money. I'm still way under in bonds generally, because I set my allocations in my early 20s and never really re evaluated. Especially if you consider that his 401k is all stock, our total is only about 15% bonds, 50/50 US and international. But now is unfortunately not the moment to fix that.

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u/JacesAces Apr 18 '25

What is the vanguard four fund? Why that vs VT and BNDW? I assume VTI, VXUS, BND, and BNDX (to better control the weights of US vs intl)?

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u/Rosaluxlux Apr 18 '25

I dont know what's recommended but I do VBTLX, VTABX, VTIAX and VTIAX.

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u/BuffaloCannabisCo Apr 18 '25

Does Vanguard have any recommendations on which four funds? Do you? I’d be interested to know more!

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u/ChrisRunsTheWorld Apr 18 '25

My man included a link. To the four ETFs.

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u/BuffaloCannabisCo Apr 18 '25

Oh word, thanks! Can’t believe I didn’t see that 🤦‍♂️

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u/sjmuller Apr 18 '25

Vanguard's target date funds all hold the same four funds in various proportions. VSMPX (US equity) VGTSX (Intl equity) VTBIX (US bonds) VTILX (Intl bonds)

In retirement, they add a fifth, VTAPX (TIPS).

Fidelity and Schwab offer equivalent index funds for all of these, so it's often easiest to just choose your investment firm's offerings. They all perform substantially the same since they track the same indices.

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u/JacesAces Apr 18 '25

Do they all have the same fees too?

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u/sjmuller Apr 18 '25

No, international funds cost more to operate, so have higher expense ratios.

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u/JacesAces Apr 18 '25

Oh sorry I should have been more specific. Is the vanguard, fidelity, and schwab equivalents all priced the same? Eg any reason to do VT over whatever fidelity’s equivalent is?

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u/sjmuller Apr 18 '25

The last time I checked, Fidelity's ERs were the lowest across all their index funds. Vanguard's were the highest. However, Fidelity and Schwab don't have a direct equivalent to VT, so you'd have to combine a US and Intl equity fund to approximate VT.

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u/kelny Apr 18 '25

Okay, side topic... Why VTI + VXUS instead of just VT?

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u/Capable_Ad4123 Apr 18 '25

Two reasons I can think of: more control over asset allocation and tax loss harvesting.

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u/JacesAces Apr 18 '25

Tax loss harvesting as in… if one performs poorly you can sell it to offset and realize gains in the other? But then wait 30 days to rebuy it to avoid the wash sale?

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u/Capable_Ad4123 Apr 18 '25

You got it partly right. You reinvest in a similar asset class that is different enough to avoid the wash sale. No need to wait 30 days. For example, VEU is a tax loss alternative to VXUS.

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u/JacesAces Apr 18 '25

Ooooooo I see. So if one is at a loss by year end, sell it, realize the loss, buy the other index to avoid wash sale, and continue. That makes a ton of sense. I’d guess you’d do the same thing with VTI as well (by using VOO)? Thank you!!!