VT: As Passive As Practically Possible
January 29, 2023
Summary
- The Vanguard Total World Stock ETF is one of the leading ETFs to invest truly passively in global stock markets.
- Passive investing means holding the market portfolio. Applied to equities, this is the market-cap weighted portfolio of all available stocks in the world. By definition, this goes beyond the US.
- Since 2008, the US market has a tracking error of 6.6% compared to VT. The active share currently stands at 41% which makes a pure-US portfolio a quite active strategy.
- Historically, active bets on the US were well rewarded. But it’s unclear if this pattern continues. The case for passive investing and global diversification is therefore as strong as ever.
- VT tracks the FTSE Global All Cap Index and holds 9,473 stocks from 49 countries. With just 0.07% TER, it is thus a very efficient instrument for global passive investors.
- SA #18: RPV – ‘Pure Value’ Is Indeed More Value Than ‘Value’
- SA #17: IUSV – Transparent Value With Modest Active Risk
- SA #16: IWD – Low Growth Is Not Necessarily Value – Also For Large Caps
- SA #15: VLUE – Transparent Value With Little Industry Bets
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