VTI - VXUS: Why Buying The International Haystack Does Not Generate Alpha
2024-03-27 17:59:52 ET
Summary
- VXUS, an ETF focusing on global equity markets outside the US, offers extensive diversification with over 8,500 holdings but has no means to generate alpha.
- Since 1986, US stocks have outperformed international stocks, with the S&P 500 significantly outperforming VXUS since 2011. However historically, there are nearly as many years international stocks outperform US stocks.
- Despite short-term fluctuations, maintaining international exposure can reduce portfolio volatility and increase yield over the long term. With the right weighting and international investment vehicle, the diversification investors seek can be properly achieved.
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VXUS: Why Buying The International Haystack Does Not Generate Alpha