2014 Roth

I posted a comment as a follow-up to last year’s Roth IRA purchase. With the stock market up 30% in 2013, I am a little nervous about a correction in 2014, but one area that didn’t do well at all was emerging markets, which lost money, and international stocks in general didn’t do nearly as well as the US market. In 2003, I was going to sell the shares of Janus Overseas because of changes in management, but instead just sold half the shares and used the proceeds to buy shares in Fidelity Diversified International. From then on Janus outperformed Fidelity just about every year and I regretted the decision to reduce my position in Janus. Since the shares in FDIVX are the only ones I have left in my non-IRA Fidelity account, I thought I might sell that position and use it for my IRA purchase.

But I took a look at the FDIVX fund profile and saw that Morningstar gives it 4 stars out of 5 right now, while JNOSX gets only 2 stars. What happened? I think one way Janus was always able to goose the performance of their fund was to dabble in emerging markets. For a while emerging markets were outperforming more established foreign markets and even the US market, partially from China’s huge gains. But emerging markets have cooled off recently and the performance at Janus has been off as well. So I decided I didn’t want to sell FDIVX while they are doing pretty well.

Instead I thought I would just contribute from my cash account at Vanguard to my Vanguard Roth IRA. I had some money sitting around in my Vanguard brokerage account left over my brief investment in Twitter that I sold on Christmas Eve, so that funded part of today’s contribution, and the rest came out of the cash account which I had been building up a little waiting for a correction that has yet to come. I put the money into Vanguard’s Total International Stock Index Fund where I already had some money. It is a 2-star fund as well, but not because of bad investment decisions, just that the index isn’t doing that great, again probably in part because part of the “Total” includes emerging markets. It was up about 15% in 2013. So maybe it will outperform the US in 2014. I have part of the Vanguard IRA funds in a short-term bond fund that I can use if a correction actually materializes at some point.