Published Thu, 05 Mar 2020 07:38:43 -0500 on Seeking Alpha
Investing in international equities and funds reduces portfolio risk and volatility.
International equities are undervalued relative to U.S. equities, and should outperform these in the coming years.
VYMI offers investors a particularly easy and cheap way to get exposure to this asset class, although the fund isn't particularly stronger than its peers.
About seven months ago I wrote about the Vanguard International High Dividend Yield ETF (VYMI), a low-cost index fund focusing on international high dividend yield stocks from around the globe. I said the fund was an easy, convenient, and cheap way for investors to get exposure to high-yield stocks from dozens of countries, which should reduce portfolio risk and volatility, and boost long-term shareholder returns. I decided to take another look at the article, first for Stanford Chemist's marketplace, and then for the broader Seeking Alpha community, just to see how my predictions fared out.
Since I last wrote about VYMI, the fund has performed slightly below expectations, as valuations and share prices continue to increase in the U.S. equities market. Although international equities keep underperforming, they still serve to reduce portfolio risk and volatility, and are significantly undervalued relative to most U.S. stocks, which should boost returns in the coming years. As such, international equities, and VYMI in particular, remain good investments, and welcome additions to any dividend investor's portfolio.
I'm going to start with an explanation of the benefits of international diversification before taking a look at the fund and its recent performance.
Benefits of International Diversification
International diversification almost always lowers portfolio risk and volatility and should, emphasis on should, lead to greater shareholder returns in the coming years. Let's take a look at each of these two points.
Risk and Volatility
One of the easiest ways to reduce portfolio risk and... Read more