VWO vs VT: Which Global ETF Is Better?
Have you ever wondered about the big, exciting world of global investing?
Well, meet VWO and VT, two funds that give you access to stocks from all over the world. VWO focuses on emerging markets, while VT takes a broader approach, offering you a slice of nearly every publicly traded company worldwide.
But which one is right for you? Let's dive in!
VWO - Vanguard FTSE Emerging Markets ETF
Goal: VWO aims to replicate the performance of an index that tracks stocks from emerging markets around the globe.
Number of Stocks held: 5,700
Dividend Yield: 0.28%
Annual Expense Fee: 0.08%
Benefits of VWO: VWO is a great way to tap into the potential of emerging markets, which often grow faster than established economies. It holds a large number of stocks, which can help spread out risk. Plus, with an expense ratio of just 0.08%, it's a very affordable way to have exposure to emerging markets.
Downsides of VWO: The flipside of the high-growth potential of emerging markets is that they can also be much more volatile, and sometimes, political or economic instability can affect your investments. If you're someone who gets nervous when your investments go up and down a lot, this might not be the right fund for you.
The Top 10 Stocks Held In $VWO:
VT - Vanguard Total World Stock ETF
Goal: VT's goal is to mirror the performance of an index that includes stocks from both developed and emerging markets worldwide.
Number of Stocks held: 9,549
Dividend Yield: 1.22%
Annual Expense Fee: 0.07%
Benefits of VT: If you want a one-stop-shop for global investing, VT is it. It gives you exposure to practically the entire global stock market, including both developed and emerging markets. Its large number of holdings helps to spread out risk, and its low expense ratio makes it an affordable choice.
Downsides of VT: While VT's wide scope is generally a strength, it also means you're exposed to regions or sectors you might not be comfortable with. Also, because it includes a lot of stocks from slower-growing developed markets, it might not grow as fast as a fund that focuses exclusively on higher-growth emerging markets.
The Top 10 Stocks Held In $VT:
Final Thoughts: VWO vs VT
Both VWO and VT could be great additions to your portfolio if you're interested in global investing.
The big difference between the two is that VWO focuses exclusively on emerging markets, while VT includes stocks from both emerging and developed markets.
VWO is a little more specialized and could potentially offer higher growth, but it also comes with a bit more risk due to the volatility of emerging markets.
On the other hand, VT is more comprehensive and gives you exposure to virtually the entire global stock market, which can help to spread out risk. In terms of size, VT is a larger fund with more holdings, which could provide more diversification.
Neither of these funds were designed to outperform the stock market. Instead, they provide a way for you to diversify your investments globally. VWO has given an annual return of 1.83% over the past ten years, while VT has provided a higher return of 7.87% over the same period.
So, while they might not beat the market during times of strong growth, they can offer a level of stability and diversification that can be valuable in all types of market conditions.
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I recently put together a master list of 88 different ETFs designed to support different investment goals. You can grab it here.
And as always: Buy things that pay you to own them.
-Josh
Blog Post: #110
Do you have a suggestion on what ETFs I should compare next? Let me know here. :)
