If you invest in a Fidelity account, the international stock index fund of choice had been Fidelity Global ex U.S. Index Fund Premium Class (FSGDX). With an expense ratio of only 0.11%, this fund holds over 1,900 stocks from both developed and emerging market countries. It tracks the MSCI ACWI ex USA index, which covers 85% of the global equity outside of the U.S.
Fidelity introduced a new international stock index fund in June 2016. It’s called Fidelity Total International Index Fund Premium Class (FTIPX). With the same 0.11% expense ratio, this fund holds over 3,700 stocks from both developed and emerging market countries. The additional 1,800 stocks include international small caps. This new fund tracks the MSCI ACWI ex USA Investable Market Index, which covers 99% of the global equity outside of the U.S. Hence the word Total in the fund’s name.
Broader coverage is better in general. If you are going to invest in index funds, you want everything. According to the MSCI fact sheet, the broader index including international small caps performed slightly better in the last 15 years than the index without international small caps.
Because the fund is new, it doesn’t have much money in it yet. As of September 30, 2016, Fidelity Total International Index Fund had less than $50 million in total assets, whereas the older Fidelity Global ex U.S. Index Fund had 30 times more in all share classes. If you are concerned that the low asset base will make the new fund not track its index well just yet, you can buy the iShares Core MSCI Total International Stock ETF (IXUS) commission-free at Fidelity. The iShares ETF tracks the same index as the new Fidelity fund, with the same 0.11% expense ratio.
You can also pay $8 commission to buy the Vanguard Total International Stock ETF (VXUS) in your Fidelity account, which I do. The Vanguard ETF holds more than 6,000 international stocks from both developed and emerging market countries, including international small caps. Because I don’t buy often, I value the added diversification (6,000 stocks versus 3,700 stocks) more than the one-time commission cost. If you buy more often, the Fidelity Total International Index Fund or the iShares Core MSCI Total International Stock ETF are just fine.
This new Fidelity Total International Index Fund is now part of Best Index Funds and ETFs at Fidelity.
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