Question of the Week

Questions of the Week

Co-founder of the Switzer Report
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Question 1: I have the Vanguard ETFs VTS (US total market) and VGAD (International Shares) in my portfolio. VGAD has a 65% exposure to the US. Upon drilling into their fact sheets, I notice 9 of the 10 top holdings are the same for each fund. So this isn't giving me the diversity I thought I was getting. Apart from doing a fund-by-fund analysis, is there any other way to gauge overlap?

Answer: The biggest companies in the world are based in the USA (Microsoft, Apple, Alphabet, Amazon etc) so that’s why the top 10 stocks of VTS (Vanguard’s US Total Market ETF) and VGAD (Vanguard’s International Shares’ Index Fund) are the same. The latter ETF only looks at developed markets.

If you want more diversity, you could look at a fund/ETF that tracks emerging markets, such as Vanguard’s VGE, or a fund/ETF that tracks all other markets excluding the USA – such as Vanguard’s VEU (Vanguard’s All World Ex US Shares).

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