Vanguard’s VTI fund is known for its inclusion of top U.S. stocks. Some may be wondering if VTI offers international exposure as well.
VTI does not have international exposure. It only includes securities from the U.S. stock market.
However, there are other Vanguard funds that do offer international exposure for those looking to diversify their portfolio globally.
What U.S. stocks are included in VTI?
The U.S. stocks included in VTI include some stocks in the S&P 500. This means the ETF is a good way to get access to more expensive stocks that may otherwise be difficult for investors without much capital to access.
The top 10 holdings in VTI are as follows:
- Apple Inc
- Microsoft Corp
- Amazon.com Inc
- Facebook Inc A
- Tesla Inc
- Alphabet Inc A
- Alphabet Inc Class C
- Johnson & Johnson
- Berkshire Hathaway Inc Class B
- JPMorgan Chase & Co
What are the benefits of investing in international stocks or funds?
The main benefit of investing in international stocks and funds is simply diversification. Gaining access to a variety of stocks across the global market helps to lessen the risk associated with investing. It is recommended that in order to successfully diversify internationally, investors hold between 10 – 20% in international stocks in their portfolio.
Investing in international stocks also help protect against fluctuations in currency. For example, if the U.S. dollar declines against foreign markets, it can be advantageous to hold some stocks that are from other parts of the world. Of course, it is important to note that the opposite is true as well and that holding too many international stocks can come at a disadvantage should the U.S. dollar rise against foreign currencies.
What Vanguard funds have international exposure?
Diversifying your portfolio across different regions can be a good investment strategy. Luckily, Vanguard also offers other funds that include international stocks.
Vanguard Total International Stock Index Fund ETF (VXUS)
VXUS is a Vanguard ETF that offers the international exposure that VTI does not. It includes access to both emerging and developed markets around the world.
VXUS is almost like a one-stop-shop for exposure to international markets. Stocks in VXUS span a variety of regions, such as Europe, the Pacific, the Middle East, North America as well as emerging markets. This means that VXUS can be a good way to diversify your portfolio by adding international stocks easily and without hassle.
Vanguard Developed Markets Index (VTMGX)
VTGMX holds a variety of international stocks with varying capitalisations. This fund, which is an Admiral shares fund, however, is much more expensive to invest in than VTI or VXUS. Investors typically need to invest with a minimum of $3,000 for the index fund, and $50,000 for an actively managed fund.
Vanguard Emerging Markets Select Stock (VMMSX)
VMMSX is an international stock fund with international exposure. It includes stocks from emerging markets around the world. This fund is also more expensive, with a minimum investment of $3,000 required.
Vanguard Emerging Markets Stock Index (VEMAX)
Another pricier fund, also with a minimum investment of $3,000 os VEMAX. This fund is passively managed and offers access to stocks in emerging markets across the globe. Even though the initial investment is higher than with funds that only cost the price of one share, like VXUS, the fund can help you gain access to low-cost emerging markets outside of the U.S.
Vanguard International Explorer (VINEX)
VINEX offers a more aggressive variety of international stocks. These stocks are in developed markets around the world. The minimum initial investment is also $3,000 for this fund.
Vanguard International Value (VTRIX)
This fund includes stocks from both developed and emerging markets that the managers think are undervalued or available for a bargain. With a minimum $3,000 investment, you can have access to these stocks.
Vanguard Total International Stock Market (VGTSX)
VGTSX is a good option for those looking for a low-cost stock mutual fund. With a $3,000 minimum investment, investors will get access to a large range of stocks in developed and emerging markets outside of the U.S.
**This is not an all-inclusive list of all Vanguard funds with international exposure, but just a summary of some which can help diversify your portfolio internationally. **
Should I invest in VTI or a fund with international exposure?
Both VTI and funds like VXUS are a good choice for investors. It would not be a bad idea to invest in both in order to diversify your portfolio internationally while also having access to high-cost stocks in the U.S. market. Of course, there are other funds available as well for a more expensive minimum investment. It is also important to note that the expense ratio on many of Vanguard’s international funds is higher than that of VTI, currently.
While VTI does not offer international exposure, there are plenty of Vanguard funds that do. VXUS is a top choice as it is the Vanguard fund that offers international diversity with an ETF. Depending on how much you have to spend as an initial investment, there are plenty of Vanguard stocks that can help you to diversify your portfolio by investing in international stocks in both emerging and developed markets.
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