eMaxis Slim All Country vs Developed Countries vs...

[Akatani]

Hey guys,
it's the start of a new year so I just stopped by to make sure there were no new exciting developments in the world of Japanese mutual funds.
I've got a load of 1550 that I need to sell and buy something better in the NISA package. I'm going to miss those dividends!

So I see eMaxis Slim all country being touted as the best fund - can someone explain why when compared to eMaxis Slim All country (ex Japan) and eMaxis Slim developed countries (先進国株式インデックス)?

I'm guessing all country vs all country ex Japan is personal preference. That's fine.
How about versus developed countries? The way I see it, all country has developing countries included in it so it's slightly safer through diversification. However, developed countries has a lower fee, and slightly better returns (and more exposure to the US market). Am I missing anything?
I have a fondness for the developed countries fund since I've had it a long time and have some great returns with it.

Thanks!

[TokyoBoglehead]

I think either is fine. My wife went developed, I went all country.

Personally I would not discount emerging markets.

[sutebayashi]

It seems to come down to what you think of developing markets.

Developing markets have had a shabby decade, but did really well in the prior decade. They may be relatively cheap versus developed markets now, but who knows.

I guess you opt for all country if you are happy / prefer whatever the default allocation to them is, or opt for developed or developing toshins if you want to control how much your portfolio contains of each.

I have been purchasing both developed and developing options separately in my own account, and have like a 30% portfolio allocation to developing, 35-40% developed. This is I believe a higher allocation than the all country would give developing… but maybe the all country would adjust overtime according to market cap etc?

I (for my kids) am purchasing All Country in the Junior NISAs this year, because I won’t be able to manually rebalance in the J-NISA from next year. Until last year I had been buying like 60% developing / 40% developed in the J-NISAs, hoping that developing markets will grow more over time that mature developed markets, but to date that doesn’t seem to have played out. Will give it another 10-16 years to find out what was best

Edit : All Country gives 12.4% allocation to developing markets: https://emaxis.jp/pdf/koumokuromi/26043 ... 221026.pdf
I am way over that… fingers crossed.

[adamu]

It's a question of asset allocation.

If you simply want the market return based on most of the mid and large cap publicly listed companies in the world, then all country is the one to pick.

If you have reasons* to tweak your stock allocation to something other than the global balance, then it's probably not for you.

*Includes the classic of believing you know better than the market.

[Gulliver]

I'm guessing all country vs all country ex Japan is personal preference. That's fine.
How about versus developed countries? The way I see it, all country has developing countries included in it so it's slightly safer through diversification. However, developed countries has a lower fee, and slightly better returns (and more exposure to the US market). Am I missing anything?

No, you’re not missing anything. Your instinct is correct. Greater diversification does not necessarily lead to less risk nor greater returns. They can, in fact, do the opposite.

Check the composition and returns the of MSCI All Country World Index vs MSCI Kokusai Index. Check to see if you’re comfortable on investing in all of the included countries. Also, keep in mind that currency fluctuations can throw a monkey wrench into your expectations.

[adamu]

No, you’re not missing anything. Your instinct is correct. Greater diversification does not necessarily lead to less risk nor greater returns. They can, in fact, do the opposite.

Of course it's better to only invest in tomorrow's winners. But who knows who they'll be? I certainly don't.

[Akatani]

Thanks for the replies. It seems to come down to having developing countries or not. I'm happy to trade higher returns now versus having even more coverage than what developed countries provides. It's impossible to predict the future, so how do we know developing countries will become better performing?
I feel like if at some point in the future developing countries start to really perform I can buy in then if I have to.

[zeroshiki]

China and India count as developing countries so you're missing on that potential growth.

I realized when I first started that I can't pick for anything so I choose the path of least resistance and just choose to invest in the world.

[Akatani]

China and India count as developing countries so you're missing on that potential growth.

That's true. The flipside to that argument is that currently developed countries is out performing all country, so I'm not missing out on any growth currently. It's potential growth (as you stated), so I feel like if I notice that China & India start doing well, and the US/Europe starts doing badly, I can start buying developing countries. I won't be ahead of the curve, but that's the trade off to choosing better performance now.

note: I have all country in my kids' junior NISA, so I'm not against it in any way.

[goran]

.....so I feel like if I notice that China & India start doing well, and the US/Europe starts doing badly, I can start buying developing countries....

...
I feel like if at some point in the future developing countries start to really perform I can buy in then if I have to.

One thing that I have learnt in this forum is that "Timing the market is a dangerous game."