Stock Markets Exposed
If the US stock market drops hard will my International mutual fund loose value?
I have Vanguard Intl mutual fund VTRIX. If the US stock markets drop hard what will the effect be on my VTRIX mutual fund? I believe that the US stock markets are overbought. Your opions appreciated.
Public Comments
- International funds are good diversifier over time, but in the short term they seem to correlate strongly with the U.S. market. Take a look at the 2000 - 2002 period: int'l funds were not a safe haven during that drop.
- probably, but the per centage drop is lightly to be less than for the U S market, much less. The fund has a sound portfolio of relatively conservative investments. I think you will weather whatever storm blows over the horizon relatively well. Remember, the future is unsure. The U S market may not drop at all.
- There is such a close correlation nowadays between U.S. stocks and international stocks that it is difficult to imagine one group not reflecting a major move in the other. "drops hard" (your term) would be a major move. International firms' shares are certain to react to it, and thus, so would this mutual fund.
- Yes it will. When the US catches a cold, the rest of the world catches pneumonia.
