VT is a popular ETF from Vanguard to invest in the entire global stock market. But is it a good investment? I review it here and discuss the what, why, and how of the fund, as well as its historical performance.
// TIMESTAMPS:
00:00 - Intro
00:12 - VT ETF - What, Why, & How
02:03 - Is VT a Good Investment?
02:18 - Performance
02:28 - Discussion
// SUMMARY:
VT is the Vanguard Total World Stock ETF. It launched in 2008. As the name suggests, the fund captures the global stock market in the form of over 9,000 holdings across large, medium, and small companies around the world. It does so by tracking the FTSE Global All Cap Index, which is market cap weighted.
Vanguard is the typical go-to provider for reliable and highly liquid index funds with the lowest fees.
Many novice investors are familiar with VTI from Vanguard, which is the total U.S. stock market. But more experienced investors will know it's likely wise to diversify in equities outside one's home country and that the U.S. stock market cannot outperform all the others in the world every year. U.S. stock market dominance is a fairly recent phenomenon that we would not expect to continue, particularly at current valuations. There have been plenty of extended periods throughout history where a global portfolio beat a U.S. portfolio, and with lower volatility and risk.
VT is the rational choice for the set-it-and-forget-it 100% stocks index investor who wants to be completely hands off. This is where the famous “VT and chill” mantra comes from as the default Bogleheads recommendation for young investors.
At this time, VT has impressive assets of over $35 billion and a relatively low expense ratio of 0.07%.
VT is indeed a good investment in the sense that stocks in general tend to be a good investment and that, once again, diversification seems to be the only free lunch in investing. After all, VT is the entire global stock market. Going back to its inception in 2008 and looking through 2023, historically it has had an annualized return of about 10% with volatility of about 16%.
VT is a great single fund solution for investors to be well diversified across geographies, styles, and cap sizes within stocks. Don't mistake this broad diversification as meaning VT is low-risk, though. Stocks are inherently risky investments; that's why we invest in them. Notice the drawdown of nearly 26% during the fund's brief lifetime.
Conveniently, as is the Vanguard way, VT is also very affordable at only 0.07% and has low turnover. This saves the long term investor big bucks on fees and trading costs over their lifetime. VT also has an Admiral Shares mutual fund equivalent VTWAX, so look out for that one in your employer's 401k menu.
Read the blog post here: www.optimizedportfolio.com/vt/
#investing #bogleheads
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Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here: www.optimizedportfolio.com/terms/
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19 май 2024
