Risk Parity Radio

Episode 450: International Funds, Nomads, New Vanguard ETFs and Portfolio Reviews As Of August 29, 2025

• Frank Vasquez

Share episode

In this episode we answer emails from a Mysterious Visitor, Pal and Byron.  We review our approach to international stock funds and how to improve their diversification, try to help out a Canadian nomad and discuss some new Vanguard funds.

And THEN we our go through our weekly and monthly portfolio reviews of the eight sample portfolios you can find at Portfolios | Risk Parity Radio.

Additional Links:

US vs International Stocks In Strong And Weak Dollar Markets (link from Episode 393:  us-dollar-strength-has-correlated-with-performance-03312023.pdf

Testfolio Analysis of VXUS vs. AVDV and IDMO:  testfol.io/analysis?s=eDLfJ4jcFLK

Constructing a Golden Ratio Portfolio with International Components:  We Built a 5% SWR Retirement Portfolio Using Fidelity in 48 Minutes (Golden Ratio Portfolio)

Byron's Link:  Vanguard Launches a New Actively Managed Bond ETF | Vanguard

New Wellington ETFs:  Vanguard to Launch First Stock-Picking ETFs With Wellington — at Its Highest Fees Yet

Breathless Unedited AI-Bot Summary:

Conventional wisdom about international diversification gets turned on its head as we explore what truly drives the performance difference between domestic and international stocks. Far from being about different economies or company headquarters, approximately 40-50% of this performance gap stems directly from currency fluctuations between the US dollar and foreign currencies. When the dollar weakens, international stocks surge; when it strengthens, US stocks lead.

For investors focused on building resilient portfolios with sustainable withdrawal rates, this revelation reshapes diversification priorities. Value versus growth diversification emerges as significantly more important than geographic diversification, followed by size factor (small versus large caps). This hierarchy challenges the simplistic notion that pairing a total US market fund with a total international fund provides meaningful protection.

Large US companies already operate globally, selling into worldwide markets regardless of headquarters location. This makes traditional total international funds less diversified from US large caps than many investors realize. Instead of blanket international exposure, we explore more effective approaches using specific international value, small-cap, and emerging market funds that provide genuine diversification benefits.

The episode also tackles practical implementation questions, including how expatriates and nomadic investors might construct globally resilient portfolios using Irish-domiciled ETFs for potential tax advantages. We briefly examine Vanguard's new ETF offerings and explain why their corporate bond funds hold limited appeal for investors seeking recession insurance rather than income.

Our monthly portfolio review highlights gold's stellar performance (up 31.56% year-to-date) amid dollar weakness, demonstrating the principles discussed throughout the episode. These eight real-world portfolios showcase different approaches to implementing risk parity principles, with performance and distribution data available at riskparityreview.com.

Support the show

Mary and Voices:

A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.

Uncle Frank and Voices:

If a man does not keep pace with his companions, perhaps it is because he hears a different drummer.

Mary and Voices:

A different drummer and now, coming to you from dead center on your dial, welcome to Risk Parity Radio, where we explore alternatives and asset allocations for the do-it-yourself investor, Broadcasting to you now from the comfort of his easy chair. Here is your host, Frank Vasquez.

Uncle Frank and Voices:

Thank you, Mary, and welcome to Risk Parity Radio. If you are new here and wonder what we are talking about, you may wish to go back and listen to some of the foundational episodes for this program.

Mary and Voices:

Yeah, baby, yeah.

Uncle Frank and Voices:

And the basic foundational episodes are episodes 1, 3, 5, 7, and 9. Some of our listeners, including Karen and Chris, have identified additional episodes that you may consider foundational, and those are episodes 12, 14, 16, 19, 21, 56, 82, and 184. Whoa, and you probably should check those out too, because we have the finest podcast audience available.

Mary and Voices:

Top drawer, really top drawer.

Uncle Frank and Voices:

Along with a host named after a hot dog.

Mary and Voices:

Lighten up Francis.

Uncle Frank and Voices:

But now onward, episode 450. 450 sounds like a magic number, except we know that three is the magic number 3 is a magic number.

Mary and Voices:

Yes, it is, it's a magic number.

Uncle Frank and Voices:

Today on Risk Parity Radio, it's time for our weekly portfolio reviews of the eight sample portfolios you can find at wwwriskparityreviewcom on the portfolios page. We also get to talk about monthly distributions. It's time for that too.

Mary and Voices:

It's time for the grand unveiling of money.

Uncle Frank and Voices:

But before we get to that, a couple of things. First, I just want to tell you our new website is up and running thanks to our listener, luke from Quebec Sackosh, and you can check it out. In all its majesty, it's got some much better search capabilities than it used to have.

Mary and Voices:

Oh, yeah, check out all its majesty.

Uncle Frank and Voices:

But if you have comments on that, please send them to our email address, frankatriskparityradiocom, and Luke and I will look at your comments and probably disregard them.

Mary and Voices:

Well, I'm not saying that we will or we won't, I'm just saying I wouldn't know, majesty, if it came up and bit him in the face. It happened once.

Uncle Frank and Voices:

But now moving on to your favorite part of the program, I'm intrigued by this how you say emails. And First off. First off, we have an email from visitor 3858. I have no name.

Mary and Voices:

Well, that right there may be the reason you've had difficulty finding gainful employment.

Uncle Frank and Voices:

And our mysterious visitor writes.

Mary and Voices:

Why no international exposure in the Golden Butterfly or Golden Ratio portfolios? Or am I missing something?

Uncle Frank and Voices:

Well, I'm not sure if you're missing anything or not. Joey, have you ever been in a Turkish prison? What you may be missing is that these are sample portfolios, so they are not intended to be the be-all and end-all of these kind of portfolios. Rather, they are just simple versions for a US investor that you could start with and modify as you see fit, because what we're really about here is applying principles and not just applying dogma.

Mary and Voices:

We have found the witch. May we burn her? Burn her, Burn her.

Uncle Frank and Voices:

Burn her. And here the dogma I think you're referring to is this nonsense idea that the only diversification that matters and the only diversification that matters and the only diversification you need, according to some boglehead who wrote this 20 years ago is one a total international fund and one total domestic fund. Wrong, that's silly.

Mary and Voices:

That's not an improvement.

Uncle Frank and Voices:

And that is not good diversification for a drawdown portfolio. Forget about it. Though we've addressed this many times before, including in episodes 362, 380, 393, 394, 403, 404, 417, 425, and 429, most recently, and you should pay attention in particular to episode 393 and the link there about the true relationship and difference between domestic and international funds, which is all about currency speculation in the dollar and not about where their headquarters are located currency speculation in the dollar and not about where their headquarters are located. So, for the purpose of having a high, safe withdrawal rate, the most important kind of diversification is not domestic versus international, it's value versus growth, value versus growth. You want to have your stock portion of your portfolio approximately half growth and half value. The next most important thing is size factor small versus large. That's what you're talking about, but it's less important than value versus growth and following on, that would be domestic versus international, because it really does not have that big an impact on what we're talking about here compared to the other factors, and there are a few reasons for that that we discussed in those earlier episodes I mentioned. First, what you need to realize is, the main distinguishing factor between US domestic stocks and international stocks from the US perspective is whether the dollar is increasing in value against foreign currencies or increasing in value against foreign currencies or decreasing in value against foreign currencies.

Uncle Frank and Voices:

Something like 40 to 50 percent of the differing performance between international and domestic stocks is due to that one factor alone, and that has nothing to do with the performance of these companies or what is going on in these countries, at least not directly. It has more to do with what the Fed is doing or US domestic authorities. We're trillions of dollars in debt. Ha ha, money printer go boom.

Uncle Frank and Voices:

And there was a nice link in episode 393 that I'll link to again, showing you that if you know that the dollar is weakening against foreign currencies, then you know that international stocks are outperforming like they are this year. And if you know that the dollar is increasing in value against foreign currencies, then you know that US domestic stocks are probably outperforming. International stocks are probably outperforming international stocks. Now, that feature is not very interesting or useful for the purposes of generating higher safe withdrawal rates, because you're getting it in other places. The truth is, when the dollar is weak, just about all of your assets are going to do better and, in particular, things like gold are going to have years like they're having this year, where they were up almost 30%.

Mary and Voices:

I love gold.

Uncle Frank and Voices:

So that feature, the main feature of international versus domestic stocks this currency speculation is just really not that important. The other thing you should know about domestic versus international stocks is that when you are looking at the large caps, particularly these total international and total domestic US funds, those companies are selling into the same markets, into worldwide markets, so they're really not that well diversified. Really, the diversification between domestic and international large caps has to do with what sectors they're in, because you'll find most of the large cap tech in the United States and that's what makes it different from international. But that is value versus growth. That is not US versus international. You are correct, sir. Yes, and so experts in this field like Oswalt, the Motor and have noted that if you own the US large caps, you have a large international exposure already. So what this means is that you need to be a little more selective in your international choices and not just be taking a total international fund. That's probably the least diversified fund you could pick if your main exposures are to US large caps, like you would have in a S&P 500 fund or a US large cap growth fund or a US total market fund. That means don't use VXUS. Not going to do it Wouldn't be prudent at this juncture. Use other things and we've made suggestions about this in many of these other episodes.

Uncle Frank and Voices:

So good choices. There would be DFA or VANTIS funds, particularly those with specific international exposures. Like AVDV is an international small cap value fund. You can get total international value in a different fund that includes the large caps. You can get value international emerging markets in A-V-E-S and there are many other funds. A lot of these are laid out in recommendations at the Paul Merriman ETF website for various asset classes and sub-asset classes.

Uncle Frank and Voices:

Capture those big tech things to the extent they exist outside the US. That would be something like IDMO, which is labeled as an international momentum fund but essentially is a large cap growth fund. So you can certainly use these as part of your allocations to stocks in any of these portfolios. Just be selective about it and make sure that you are primarily diversifying into value versus growth first and not just total market international thingy.

Uncle Frank and Voices:

Forget about it and I'll give you another link showing VXUS against some of these other kinds of funds I'm mentioning and you can see that it performs worse and it's less diversified from the S&P 500. So it's time to come into the 2020s and start using the best funds available and not something that somebody told you about 15 or 20 years ago. Now I did an example of constructing a golden ratio style portfolio with some international funds in it in a Bigger Pockets Money podcast episode and there's a video on that. I'll also link to that in the show notes and so you can see how we did a variation in a couple of different ways on a golden ratio kind of portfolio, and that's really the way you want to be approaching these kinds of issues. So, yes, you were missing something, but it probably wasn't what you thought you were missing you keep using that word.

Mary and Voices:

I don't think it means what you thought you were missing. You keep using that word. I don't think it means what you think it means.

Uncle Frank and Voices:

But thank you for bringing it to our attention and thank you for your email. Second off. Second off we have an email from Pal.

Mary and Voices:

No way.

Uncle Frank and Voices:

And Pal writes.

Mary and Voices:

Hi Frank, big fan of the show and your thoughtful breakdowns of asset allocation and risk parity principles, you are talking about the nonsensical ravings of a lunatic mind. Sensical ravings of a lunatic mind. I am a Canadian citizen in my 30s who has achieved partial financial independence and plans to live a nomadic or expat lifestyle. I'm currently investing through IBKR and would like to construct a golden ratio style portfolio that is resilient across countries and currencies, especially as I'm unsure where I'll retire. Here are my constraints and preferences. I prefer assets denominated in US dollars for global purchasing power and I'll be leaving Canada soon.

Mary and Voices:

I want to hold Ireland domiciled ETFs where possible, since I've read they benefit from the 15% US dividend withholding tax due to the US-Ireland Treaty, even for non-US residents dividend withholding tax due to the US-Ireland Treaty, even for non-US residents. I would like to become a resident in a tax-free or territorial tax country later on, like the UAE, so I'm trying to future-proof my holdings now. I'm not sure whether I should choose accumulating or distributing share classes for my ETFs, since different jurisdictions treat dividends differently. My goal is to hold diversified, low-volatility global assets in line with golden ratio, eg 40% stocks, 20% long-term treasuries, 15% REITs, 15% gold, 10% cash short-term bonds, but ideally using non-US domiciled instruments where appropriate. Could you walk through how someone like me might construct a golden ratio portfolio with globally efficient ETFs, especially with Ireland domiciled? Options on IBKR Ticker symbols would be very helpful.

Uncle Frank and Voices:

Surely you can't be serious. I am serious, and don't call me Shirley.

Mary and Voices:

Thanks so much for the podcast. Your witty, rational commentary is a breath of fresh air in the finance world. You mean, let me understand this because I'm funny. How I mean funny? Like I'm a clown, I amuse you, I make you laugh. What do you mean funny? Funny, how, how am I funny?

Uncle Frank and Voices:

Now you asked whether I could walk you through construction of a golden ratio portfolio using Irish ETFs and providing ticker symbols. Ha ha. Now what do you think my answer to that really is? I don't think I'd like another job. Yeah, that's too much work, but I'll tell you how to do it because you could do this yourself.

Uncle Frank and Voices:

First, if you go over to portfolio charts and bring up golden ratio portfolio in their portfolio section, you can change the country in the main description and then, if you click on each of the components, it will give you different ETFs that correspond for that country. Now, it doesn't have Ireland, but I think United Kingdom might be close enough for your purposes there. Now, in order to get to Irish ETFs specifically, I would simply use ChatGPT or your favorite artificial intelligence, because this is something artificial intelligence is very good at doing, and if you ask it for ETFs for gold or large cap growth or anything else, it will give you ETFs. I think IGLN, for example, is the gold ETF that is located in Ireland.

Uncle Frank and Voices:

Now, as for what you should do specifically here, that is well beyond my pay grade, because I'm not familiar with the tax treatments of various funds in various different countries, depending on your nationality and where you end up. I think you will have an easier time if you're not a US citizen, because the US is one of the few countries in the world that taxes their citizens wherever they are, subject to various tax treaties, of course, but this might be an academic discussion. If you don't know where you're going to retire anyway. I think what you really need to look at is something called flag theory or multi-flag theory, and it has to do with people trying to optimize their life by moving from country to country and collecting additional citizenships or passports or other things for financial and other purposes. But there's a whole world of information out there that I'm aware of, but I don't know what the details of it are.

Mary and Voices:

I don't know.

Uncle Frank and Voices:

This is something that people like Joshua Sheets of Radical Personal Finance like to talk about a lot, but I'm afraid it's beyond my pay grade. I do wish you luck in your travels and your endeavors. Hopefully I did give you something that will help you, and thank you for your email Last off. Last off, we have an email from Byron. Looks like I picked the wrong week to quit drinking and Byron writes Frank, I thought this might be interesting to you.

Mary and Voices:

I don't have any questions per se, but would love to hear your critiques if you're ever running out of topics on Risk. Parity Radio Best Byron, hey talk about it.

Uncle Frank and Voices:

What do you say? Well, now, that sounded cryptic, but the this that was being referred to was a link to an article, actually a press release, about Vanguard's new actively managed bond fund ETF called VGMS, and I actually don't have that much to say about it. It looks like a corporate bond fund of low-rated bonds that are not quite junk, but somewhere in the middle of an intermediate duration, and these things are, frankly, of little or no interest to me because they just generate taxes and I don't use bonds for income. What we use bonds for in our portfolios here is for diversification and, in particular, for recession insurance. So we want something that's going to go up in value during a recession, and I don't think this is going to qualify, given it's a low-grade corporate. Man's got to know his limitations.

Uncle Frank and Voices:

This is part of a pattern or, I guess, corporate strategy for Vanguard. These days they are releasing a lot more different kinds of ETFs. I know they are releasing VGHY as their new high-yield bond ETF that corresponds or is similar to their older mutual fund that invests in junk bonds Interesting. Now they're also releasing ETFs that are patterned after their venerable Wellington fund, and I think they're going to have three versions of that, and that is actually of some interest to say, somebody who is like your great aunt and suddenly they have this money and they want to invest it in something, but they're maybe at Schwab or at Fidelity or not at Vanguard, because the Vanguard Wellington fund is often a place just to stick money like that for somebody who does not want to manage it at all but wants something that's better than a standard 60-40 portfolio. So these ETFs are going to be available on all platforms. I know that's better than a standard 60-40 portfolio, so these ETFs are going to be available on all platforms. I know that's not what you asked about, but I've been seeing these announcements from Vanguard rollout, particularly this summer, and I think they're just really making an effort to compete better with all of the other funds that are being rolled out by other providers, which makes sense because they have this reputation of offering a generic low-cost fund, and so they might as well offer that in ETF form in as many ways as possible so that they can attract money that is not only invested at Vanguard but invested in other places that wants to use a Vanguard fund.

Uncle Frank and Voices:

Most of these things will probably not be of interest to us, such as these high-yield corporate bond funds. Forget about it, but perhaps they will be of interest to somebody, so it makes sense for them to do that and I'm afraid that's all I have to say about it Inconceivable. But thank you for your email. I just got back from the Hors de Fe. Hors de Fe what's an Hors de? But thank you for your email. And the something completely different is our weekly portfolio review. So the eight sample portfolios you can find at wwwriskpartyreviewcom on the portfolios page, and we're also going to talk about monthly distributions. Before we get to that, let's just take a look at what the markets are doing so far this year. S&p 500, represented by VOO, is up 10.79% for the year so far. Nasdaq 100, represented by QQQ, is up 11.86% for the year. Small cap value, represented by the fund VIOV, is up 1.75% for the year. You'd do better with funds like AV. Uv Gold is still the big winner and has hit another all-time high.

Uncle Frank and Voices:

And that's the way uh-huh, uh-huh, I like it. Kc on the Sunshine Band Representative Fund, gldm is up 31.56% for the year so far. Long-term Treasury Bonds, represented by the Fund VGLT are up 2.64% for the year. Reits, represented by REET, are up 8.08%. Commodities, represented by the fund PDBC are up 2%. Preferred shares, represented by the fund PFFV are up 2.07% and managed futures, represented by the fund DBMF, are up 0.56% for the year so far.

Uncle Frank and Voices:

Moving to these portfolios, first one's this reference portfolio, the All Seasons. It's only 30% in stocks and a total stock market fund, 55% in intermediate and long-term treasury bonds and the remaining 15% in gold and commodities. It is up 1.37% for the month of August. It's up 7.93% year-to-date and up 17.17% since inception in July 2020. We will be distributing $32 out of it from cash for September accumulated cash that is at a 4% annualized rate and that'll be $283 year-to-date and $1,973 since inception in July 2020.

Uncle Frank and Voices:

Next one's Golden Butterfly. This one is 40% stocks divided into a total stock market fund and a small cap value fund, 40% in treasury bonds divided into long and short and 20% in gold. It's up 3.41% month to date for August. I guess that's the whole month. It's up 10.39% year to date and up 47.84% since inception in July 2020. We'll be distributing $48 out of it for September. It's going to come out of VIOV, because small cap value has actually done really well since rebalancing in July. So that's at a 5% annualized rate. That'll be $412 year-to-date and $2,713 since inception in July 2020.

Uncle Frank and Voices:

Next, one's golden ratio this one's 42% in stocks divided into a large cap growth fund and a small cap value fund, 26% in long-term treasury bonds, 16% in gold, 10% in a managed futures fund and 6% in a money market. In cash, it is up 2.98% for the month of August. It's up 9.5% year-to-date and up 42.29% since inception in July 2020. We are distributing $46 out of it. It always comes out of cash out of this portfolio. That's the way we manage it. It's at a 5% annualized rate. It'll be $395 year-to-date and $2,657 since inception, july 2020. X1 is a risk parity ultimate. I'm not going to go through all 12 of these funds. It's up 2.95% for the month of August. It's up 8.79% year-to-date. It's up 29.83% since inception, july 2020. We are distributing $42 out of it for September. It's coming out of accumulated cash. It's at a 5% annualized rate. It'll be $359 year-to-date and $2,809 since inception in July 2020.

Uncle Frank and Voices:

And now, moving to these experimental portfolios that don't involve leveraged funds. Don't try this at home. First one's the accelerated permanent portfolio. This one is 27.5% in a levered bond fund TMF, 25% in UPRO, a levered stock fund, 22.5% in gold GLDM, and remaining 25% in a preferred shares fund PFFV. It's up 2.24% for the month of August. It's up 10.02% year-to-date and up 11.15% since inception in July 2020. We'll be distributing $39 out of it for the month of September. That's at a six percent annualized rate and that will be coming out of the gold fund, gldm. That'll be $347 year-to-date and $2,977 since inception in July 2020.

Uncle Frank and Voices:

Next one's the aggressive 50-50. This is the least diversified and most levered of these funds. It's one-third in a levered bond fund TMF, one-third in a levered stock fund UPRO and the remaining third in ballast in a preferred shares fund and intermediate treasury bond fund. It's up 1.7% for the month of August. It's up 4.78% year-to-date, but down 7.71% since inception in July 2020. We were distributing $33 out of it in accumulated cash for September. It's at a 6% annualized rate. That'll be $289 year-to-date and $2,957 since inception in July 2020.

Uncle Frank and Voices:

Next one's the levered golden ratio. This one's a year younger than the first six it is 35% in a composite fund called NTSX that's the S&P 500 and Treasury bonds levered up 1.5 to 1. 15% in AVDV, an international small cap value fund. 20% in GLDM, a gold fund. 10% in KMLM, a managed futures fund. 10% in a levered bond fund, tmf. The remaining 10% divided into a levered fund that tracks the Dow and one that tracks a utilities index. It is up 3.24% month to date. It's up 13.72% year to date and up 8.72% year-to-date and up 8.69% since inception in July 2021. We'll be serving $36 out of it. It'll come out of AVDV, that International Small Cap Value Fund. That's for September. It's at a 5% annualized rate. It'll be $307 year-to-date and $1,863 since inception in July 2021. And the last one is this Optra portfolio One portfolio to rule them all, a return-stacked portfolio that's only a little over a year old.

Uncle Frank and Voices:

It is 16% in UPRO, a leveraged stock fund, 24% in AVGV, which is a worldwide value-tilted fund, 24% in GOVZ, which is a worldwide value-tilted fund, 24% in GOVZ, which is a Treasury Strips fund, and the remaining 36% divided into gold and a managed futures fund. It is up 3.06% for the month of August. It's up 11.47% year-to-date and up 14.72% since inception in July 2024. We are distributing $54 out of it for the month of September. It's at a 6% annualized rate and it'll come out of the gold fund, gldm. That'll be $460 year-to-date so far and $720 since inception in July 2024. And that completes our weekly and monthly portfolio reviews and distribution summary, boring. And you can find all that at the website at wwwriskpartyreviewcom, on the newly revamped portfolios page. Thanks to Luke. If you are so inclined, we have top men working on it right now.

Mary and Voices:

Who Top men?

Uncle Frank and Voices:

right now who Top men? But now I see our signal is beginning to fade. If you have comments or questions for me, please send them to frank at riskparityraidercom. That email is frank at riskparityraidercom. Or you can go to the website, wwwriskparityraidercom. Put your message into the contact form and I'll get it all that way. If you haven't had a chance to do it, please go to your favorite podcast provider and like, subscribe, make some stars or follow A review. That would be great. Okay, thank you once again for tuning in. This is Frank Vasquez with Risk Party Radio Signing off. I'll never come back on an old school track.

Mary and Voices:

I'm kind of a soul becau-. So central does it like nobody does oh, it's party time. Straight up coming from the west side oh, she's got the flavor. Yeah, this is how we do it. And money doesn't like nobody does. This is how we do it. Come on now, dip down. You know that this is how we do it. This is how we do it. The Risk Parody Radio Show is hosted by Frank Vasquez. The content provided is for entertainment and informational purposes only and does not constitute financial, investment, tax or legal advice. Please consult with your own advisors before taking any actions based on any information you have heard here, making sure to take into account your own personal circumstances.

People on this episode

Head Shot

Frank Vasquez

Host