Thoughts followed by explanations:
- I'm not fond of using global in lieu of foreign + domestic
- The funds listed are all good but are all of one type; you might want expand your search
- VMVFX is rare, if not unique, for good or for bad
Companies that invest internationally pay foreign taxes. In most cases, including most global funds, they declare your net income after those taxes on your
1099, and so you pay taxes (in a taxable account) on your net earnings. But if over 50% of a fund is foreign
and if it chooses to do so, it can declare your gross income (before paying those taxes) on your
1099, and give you a foreign tax credit.
If you just deduct that amount, you're in the same place as if the fund itself had just declared your net income. However, you also have the option (in a taxable account) of getting a dollar for dollar credit - that's worth more. Many if not most global funds don't give you this option. Foreign funds do.
I prefer to invest in foreign funds (to control foreign exposure on the portfolio macro level) and domestic funds with a good slug of foreign companies (to enable fund managers to tweak my foreign exposure). That way I get the benefit (some would say drawback) of delegating tactical foreign/domestic allocation to fund managers, while maintaining control over the larger picture.
All three funds mentioned are off the (M*) chart on the growth side, and nearly off the chart in average company size (giant). Which explains their appeal to Ted. This part of the market has done so well for so long that it's easy to forget there are other companies out there.
Here's an article (with lots of numbers) on the Fidelity site that compares value and growth performance (domestic only) between
1990 and 20
15 (26 years). If you don't want to read it, just look at Table 2 - it measures outperformance of growth or value (in basis points) in rolling five year periods. From 2005 on, growth "won" virtually all periods. Yet over the 26 year period, value came out better on average.
https://www.fidelity.com/learning-center/trading-investing/trading/value-investing-vs-growth-investingOn the value, and somewhat smaller cap, side, you might look at PGVFX. Exclude 20
17 and its five year performance (20
11-20
16) matches that of MGGPX, with significant stretches of differing performance (sometimes better, sometimes worse). You can see that clearly from
this chart. The point is that there's more to investing than giant cap ultra growth.
Some funds tend to drift from domestic to global over time. Some of the Mutual Series funds did that. MDISX renamed itself from Discovery to Global Discovery, MQIFX changed from Qualified (originally designed for tax-qualified accounts) to Quest. Both were originally domestic value funds. I'm not suggesting those.
Another fund, this one worth considering, that is following a similar arch is FLPSX. While M* still classifies it as a domestic fund, it may be the widest ranging fund you'll find. Which may be part of why one looks at global funds. Foreign stocks and domestic stocks each comprise 40%-50% of its portfolio (with more domestic). ARTRX has a very similar ratio, though its domestic allocation is a tad higher, just above
1/2. PRGSX is even more domestic, with 58% of its holdings onshore.
Finally, VMVFX is an oddity because it is a hedged fund. It launched as the dollar was rising smartly, so that hedging contributed significantly to its outperformance. This is not to say that it isn't a fine fund, but that one where the numbers must be scrutinized more closely when comparing with other funds.
