VT the most diversified equity ETF?

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Yesterdaysnews
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VT the most diversified equity ETF?

Post by Yesterdaysnews » Wed Jun 10, 2015 3:22 pm

Despite all my searching, I have yet to find an equity ETF more diversified globally than VT (Vanguard Total World ETF). Seems this is the single most diversified equity instrument as a single ETF holding available. Anyone know of any others? I'm talking a single ETF holding, not a combination of two.

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bertie wooster
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Re: VT the most diversified equity ETF?

Post by bertie wooster » Wed Jun 10, 2015 4:39 pm

It would seem that one would be hard pressed to find better diversification.

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Rx 4 investing
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Re: VT the most diversified equity ETF?

Post by Rx 4 investing » Wed Jun 10, 2015 4:46 pm

I am running a simple two (2) fund portfolio in one of my IRAs, 50% to VT and 50% to BND.

I agree with your research that VT seems to do the job on the stock side if you only want one (like I did). FYI... The only other one I considered was

iShares MSCI ACWI (ACWI); it too has a large number of similar domestic and int'l holdings, but the expense ratio is 0.33% vs. VT's 0.17%.

http://www.etf.com/ACWI
“Everyone is a disciplined, long-term investor until the market goes down.” – Steve Forbes

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SpringMan
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Re: VT the most diversified equity ETF?

Post by SpringMan » Wed Jun 10, 2015 4:52 pm

Cost conscience investors can lower expenses by using two funds, VTI and VXUS.
Best Wishes, SpringMan

Day9
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Re: VT the most diversified equity ETF?

Post by Day9 » Wed Jun 10, 2015 5:07 pm

VT has 7161 stocks

VTI has 3814 stocks

VXUS has 5888 stocks

3814 + 5888 = 9702 > 7161
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printer
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Re: VT the most diversified equity ETF?

Post by printer » Thu Jun 11, 2015 3:09 am

What do you mean by diversification? A large number of stocks? Equal weight across risk categories? Something else?

I'm a fan of VT. When I looked last year, according to Morningstar, VT had a lower tax ratio than VXUS+VTI, so I have been using VT instead of VTI+VXUS. Note that some people around here don't trust Morningstar's tax cost ratios. I ended up moving away from VT as I want to be able to rebalance between bond funds and broad equity funds in my 401k, and VT isn't in my 401k offering. I now have VINIX + VTSNX as my VT substitute in my 401k.

If you want to hold a single equity fund for decades, a more interesting question than how to save hundredths of a percentage of expense ratios, is, perhaps, a question about the relative weight of US vs. non-US stocks. VT will automatically adjust to mirror world market cap proportions (I think), whereas if you hold VTI and VXUS then you'll have to decide on the weights somehow yourself. If, 10 years from now, the US is 70% of the world's equity market cap, and ex-us is 30%, would you rather hold in those proportions, or would you rather hold 50/50? Using VTI+VXUS may give you different weights than holding VXUS. Also, the overhead of rebalancing between VTI + VXUS yourself to follow world market cap weighting could be significant over a period of decades. I'd trust Vanguard to do that more efficiently than I could do it myself, and suspect that if you want weighting by world market cap, it's probably more efficient to use VT than VTI+VXUS. I don't have any additional data about that to offer you, though.

VT has 10% exposure to emerging markets, whereas VXUS has 20%. As I recall, VXUS & VT have other differences, e.g., Canada weighting.

You could look here: http://news.morningstar.com/morningstar ... funds.aspx

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Maynard F. Speer
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Re: VT the most diversified equity ETF?

Post by Maynard F. Speer » Thu Jun 11, 2015 3:30 am

Yeah, what's perhaps normally meant by 'diversified' is 'risk diversified' ..

If you've seen the global index broken down by risk concentration, you see risk isn't particularly diversified .. It's a few large economies, and within them a few big sectors and companies .. The thousands and thousands of stocks that make up the long-tail are effectively just noise

I'd be thinking something constructed on more of an equal weight basis if diversification's what you want
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes

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InvestorNewb
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Re: VT the most diversified equity ETF?

Post by InvestorNewb » Thu Jun 11, 2015 6:19 am

Here is a post I made that you may find helpful:
viewtopic.php?f=1&t=148120&p=2212410#p2212410
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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SpringMan
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Re: VT the most diversified equity ETF?

Post by SpringMan » Fri Jun 12, 2015 11:26 am

Though not available as an ETF, Vanguard's actively managed Minimum Volatility Fund is an interesting alternative. Admiral shares clock in at 20 basis points vs 17 basis points on VT.
http://www.morningstar.com/funds/XNAS/VMNVX/quote.html
Best Wishes, SpringMan

countmein
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Re: VT the most diversified equity ETF?

Post by countmein » Fri Jun 12, 2015 2:32 pm

SpringMan wrote:Though not available as an ETF, Vanguard's actively managed Minimum Volatility Fund is an interesting alternative. Admiral shares clock in at 20 basis points vs 17 basis points on VT.
http://www.morningstar.com/funds/XNAS/VMNVX/quote.html
Heads up that VMNVX is tax inefficient. Bummer there's no ETF.

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Archie Sinclair
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Re: VT the most diversified equity ETF?

Post by Archie Sinclair » Fri Jun 12, 2015 9:30 pm

printer wrote:Also, the overhead of rebalancing between VTI + VXUS yourself to follow world market cap weighting could be significant over a period of decades.
If you want to hold the market cap weighting, VTI and VXUS will actually automatically adjust, just because of math. For example, if the market cap of US stocks doubles, your VTI shares would be worth twice as much as they were before. Or if foreign market cap declines, so will your VXUS shares. If you hold VTI and VXUS, and you're trying to match changes in world market cap, your best course is to do absolutely nothing.

printer
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Re: VT the most diversified equity ETF?

Post by printer » Fri Jun 26, 2015 3:41 am

Archie Sinclair wrote:
printer wrote:Also, the overhead of rebalancing between VTI + VXUS yourself to follow world market cap weighting could be significant over a period of decades.
If you want to hold the market cap weighting, VTI and VXUS will actually automatically adjust, just because of math. For example, if the market cap of US stocks doubles, your VTI shares would be worth twice as much as they were before. Or if foreign market cap declines, so will your VXUS shares. If you hold VTI and VXUS, and you're trying to match changes in world market cap, your best course is to do absolutely nothing.
I figure that VT is specifically designed to match world market cap, whereas I'm not sure that VTI and VXUS are designed to be market cap weighted by world stock. That is, it seems more likely that if some new country appeared or some change occurred, VT would be more likely to take action to stay world market cap weighted than VXUS+VTI. But you may well be right. I haven't looked closely at the prospectuses.

Oak_Tree
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Re: VT the most diversified equity ETF?

Post by Oak_Tree » Sat Jun 27, 2015 2:23 am

VT is 50% US and 91% Developed as seen here http://etfdb.com/etf/VT/

Run a correlation between VT and SPY ... as goes the US so goes VT... :shock:

I like the VTI, VXUS combo that many are referring, but would throw in the relatively new FM [Frontier markets of iShares] as well...this would bring in some automatic currency diversification as a hedge against the US$ :dollar hitting turbulence. Just my two cents :D

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