I've read a lot about this fund and it has been doing extremely well the last few years.  I realize that it's riskier than some funds.

Any opinions?


The minimum is $3000 and that's what I plan to open the account with.  I certainly don't want to lose the money but I'm fairly young (28) and it wouldn't be too horrible if I lost the money.  I want a high return over the next few years because I plan to eventually put money into building a house.  I don't intend to use this money(would rather keep it working for me) but there's always the possibility that I might need to use it.

Impressive returns.  
Risky.  
Low expense ratio.  
Good for a little "gamblin' money" in an already diversified portfolio.

I didn't see a Morningstar rating/ranking.

Put it in a Roth IRA.

Then invest it in whatever.  Emerging markets is fine, but can be pretty volatile.  The money might not be there when you need it.

IMO emerging markets together with international exposure should not make up more than 50% of your total porfolio.

You can still pull out your ROTH contributions w/out penalty/tax and the the IRS allows a $10K tax free withdrawal exemption on the proceeds used for a first home purchase.

Quoted: ...it wouldn't be too horrible if I lost the money. ...I plan to eventually put money into building a house.

I read these statements as being very opposite.

If it's not horrible to lose $3000 ( ), you're gambling. Nothing wrong with that, but realize you should have secure resources for emergencies before going out gambling.

If you want to put the money into a house eventually, then gambling with the money sounds like a bad idea. You can get a guaranteed 4.3% return from a GMAC savings account with a $500 minimum (see here, it's like an ARFCOM for really cheap people). A house is generally a good investment, so (again) hoping to hit it big with your downpayment sounds like a bad idea. You might get lucky, but...

It's not a gamble like going to a casino.  I had a very safe mutual fund that returned about 8% last year.  That's far better than 4.3%!  

Mutual funds aren't a gamble...they are just a little risker than putting your money into a savings account and staying one small step above inflation.

When I say that it's not horrible to lose $3000....well, it's unlikely that I'd lose the entire $3000.  If the stock market tanks, I can still withdraw enough within time that I wouldn't lose the entire amount any way.  I'm still young and good investors recommend that you invest riskier when you are young and then move investments into more secure investments as you age due to it taking you longer to earn the same amount.  No where did I say that I was hoping to hit it big.  You don't "hit it big" with mutual funds.  But, you can earn much more than a simple savings account can.  If I had invested that same $3000 in energy mutual funds 4 years ago, that same $3000 would be about  $8-9000 now.  NO savings account can give you anything near what a good mutual fund can return.  

I do think that a house is a good investment.  The house that I own now has been a great investment and when I finally build my own house, I plan to live in it for 5 years and then I plan to sell it and build another one.  I'll own that one outright.  

But, assuming that the emerging markets fund continues to grow like it has been...and things look good so far......in two years that same $3000 will turn into nearly $5000.  That's far better than the $3263 that the savings account will have.

Mutual funds aren't a gamble...

Would you have said the same thing about tech funds in 1999? It all depends on how you define gambling. Anytime you have significant risk of losing principal I'd call that gambling.

4.3% on that savings account is not a great return, but it does give you zero risk of principal. If I was counting on that money for a downpayment on a house "in the next few years", that's what I'd want.

Here's what Morningstar says about the Vanguard fund:

Role in Portfolio: Specialty

Explanation of "Role in Portfolio":  

A guide to assist with portfolio allocation, funds can be designated core, supporting player or specialty. Core funds should be the bulk of an investor's portfolio, while supporting players contribute to a portfolio, but are secondary to the core. Specialty offerings tend to be speculative, and should typically only be a small portion of investors' portfolios.

And here's something from their analyst report:

However, it's highly unlikely that the fund will continue to post annualized returns of nearly 35%. And given the history of emerging markets, it's possible it could suffer sharp losses--it has in the past. Those facts are essential to keep in mind while evaluating this fund now. Also keep in mind that you probably already own emerging-markets stocks to some degree if you own broad-based international funds. In short, this is a sound option (though the exit fee charged even to long-term shareholders is hard to justify); just be sure to keep expectations in check.

Granted, I cherry-picked that quote to support my argument. Morningstar has lots of good things to say about this fund.

Good luck.

Quoted: It's not a gamble like going to a casino.  I had a very safe mutual fund that returned about 8% last year.  That's far better than 4.3%!   Mutual funds aren't a gamble...they are just a little risker than putting your money into a savings account and staying one small step above inflation. When I say that it's not horrible to lose $3000....well, it's unlikely that I'd lose the entire $3000.  If the stock market tanks, I can still withdraw enough within time that I wouldn't lose the entire amount any way.  I'm still young and good investors recommend that you invest riskier when you are young and then move investments into more secure investments as you age due to it taking you longer to earn the same amount.  No where did I say that I was hoping to hit it big.  You don't "hit it big" with mutual funds.  But, you can earn much more than a simple savings account can.  If I had invested that same $3000 in energy mutual funds 4 years ago, that same $3000 would be about  $8-9000 now.  NO savings account can give you anything near what a good mutual fund can return.   I do think that a house is a good investment.  The house that I own now has been a great investment and when I finally build my own house, I plan to live in it for 5 years and then I plan to sell it and build another one.  I'll own that one outright.   But, assuming that the emerging markets fund continues to grow like it has been...and things look good so far......in two years that same $3000 will turn into nearly $5000.  That's far better than the $3263 that the savings account will have.

Mutual funds are less of a gamble than single stock picks...........and are the first place to scrutinize in investing/gambling/speculating. You can loose money pain and simple. The Vanguard fund your talking about, #0533, is a basket of international INDEX FUNDs.

I'm in the oppenheimer dev mkts C fund.  Had it less than a month and its up 8%

symbol is ODVCX

overseas funds have done well the last couple years.  I'm also in Mathews asian funds, the china (MCHFX) and India (MINDX) in particular.  Both have returned about 6% so far, have owned them about 2 months.

Quoted: I'm in the oppenheimer dev mkts C fund.  Had it less than a month and its up 8% symbol is ODVCX overseas funds have done well the last couple years.  I'm also in Mathews asian funds, the china (MCHFX) and India (MINDX) in particular.  Both have returned about 6% so far, have owned them about 2 months.

Watch out for C shares.  The longer you hold them, the more it may cost you.  It has the highest expenses past a few years as you are paying to avoid loads....

Morningstar Report:

Vanguard Emerging Markets Stock Index is a solid offering, but not as magical as its current numbers might suggest.

Through Dec. 1, 2005, this passively managed fund, which attempts to match the return of a customized version of an MSCI emerging-markets index, has an astounding trailing three-year average annual return of 34.4%. That includes a year-to-date showing of 26.6%. If you had a decent amount of money in funds performing at that torrid pace for any appreciable length of time, you likely could move up your retirement date by a decade or so.

Of course, such dreams are just that--dreams. True, this fund's trailing three-year return is no fluke or gimmick. It does a reasonably sound job tracking its benchmark and has low expenses, and many companies in its portfolio are impressive firms--global leaders in their fields. The reason it has such a high three-year (and 2005) return is that emerging markets have generally been on fire, outperforming even the rallying markets in Western Europe and Japan. And this fund has done at least as well as its rivals in the diversified-emerging-markets category. It is in the middle of that group for the year to date and is ahead of two thirds of them for the three- and five-year periods.

However, it's highly unlikely that the fund will continue to post annualized returns of nearly 35%. And given the history of emerging markets, it's possible it could suffer sharp losses--it has in the past. Those facts are essential to keep in mind while evaluating this fund now. Also keep in mind that you probably already own emerging-markets stocks to some degree if you own broad-based international funds.

In short, this is a sound option (though the exit fee charged even to long-term shareholders is hard to justify); just be sure to keep expectations in check.

See Previous Analyst Reports

Year Total Return (%) +/- Category
YTD 32.05 0.41
2005 32.05 0.41
2004 26.12 2.35
2003 57.65 2.30
2002 -7.43 -1.71
Data through 12-31-2005

Fund Family Score for International Stock:  3.4
Number of Funds Scored:  12
From a cost perspective, Vanguard's foreign offerings can't be beaten. They are by far among the cheapest offerings within their respective categories. Although the indexed options don't always blow the lights out, their returns have usually been competitive and some, such as Vanguard European Stock Index, have been standouts over time. Investors should note, however, that the indexes some funds track, such as Emerging Markets Stock index, are homespun creations that don't include the broadest range of countries. The actively managed funds--which are all subadvised--are more of a mixed bag, although Vanguard does a nice job monitoring fund subadvisors.

Role in Portfolio
Specialty. Because of its emphasis on potentially volatile markets and the fact that most international funds already contain emerging-markets exposure, this fund is best kept to a small portion of an investor's portfolio.

ETA:  A Morningstar Subscription is well worth the investment.

tag for later

Well I have the Emerging Markets fund and I've noticed that it fluctuates a lot more than past US funds.  However, I have almost made as much in one month of this fund than I made in domestic funds all of last year. (Although it's a little down at the moment).  

I don't intend to keep this fund for a long time.  I plan to keep it all of this year and then look at it for next year and see if I want to take the risk.  I don't think I'll keep my money in it for more than two year but then I'll have to see.  

I would be extremely cautious about jumping on the Emerging Markets bandwagon at this point.  They've had three years of incredible gains.  70% of money is going international now, where before it was much lower.  I like international for the diversity and noncorrelation, but I personally am not comfortable jumping in now.  Those emerging markets have a  history of doing nothing for a number of years then taking off.  As I recall, the 10-year return isn't great even with three years of run-up returns.  I'm not saying its a bad fund and I think it would be beneficial in a portfolio, maybe 5-15% in my opinion, I would just be cautious right now.