As an investor in international stocks via several index funds, I’ve considered and reconsidered in which account I ought to hold those funds.
The primary goal of asset location is to increase the tax-efficiency of your portfolio, at least it will be for most people.
You want to pay the lowest amount of tax on your chosen asset allocation. My assumption has been that the taxable brokerage account is the best place for international funds for a few reasons that I’ll discuss below, but I have never put that theory to the test.
I’ll admit to not knowing much about investing when I first had real money to invest. I had read somewhere that owning international stocks in a taxable account allowed you to take advantage of the Foreign Tax Credit, and that was good enough for me.
Since I keep most of money with Vanguard, I was able to choose popular index funds in the international and domestic stock categories that I currently have or have previously held in my own accounts.
Vanguard gave me the percentage of dividends that were qualified dividends versus ordinary, non-qualified dividends. Vanguard also has a .pdf file containing the foreign tax paid by each fund as a percentage of the dividend yield.