ETF Spotlight: Vanguard Total World Stock

May 16th at 8:00am by Tom Lydon

ETF Spotlight on Vanguard Total World Stock ETF (NYSEArca: VT), part of an ongoing series.

Assets: $1.8 billion.

Objective: The Vanguard Total World Stock fund tries to reflect the performance of the FTSE Global All-Cap Index, which includes both developed and developing market stocks.

Holdings: Top holdings include: Apple (NasdaqGS: AAPL), Exxon Mobil (NYSE: XOM), Microsoft (NasdaqGS: MSFT), International Business Machines (NYSE: IBM) and Royal Dutch Shell.

What You Should Know:

  • Vanguard sponsors the fund.
  • VT has an expense ratio of 0.22%.
  • The fund includes 3771 securities and the top ten holdings account for 8% of the overall portfolio.
  • Region allocations include: Emerging Markets 14.1%, Europe 22.9%, Pacific 12.4%, Middle East 0.3% and North America 50.3%.
  • Top country weightings include: U.S. 41.3%, U.K. 8.2%, Japan 7.2%, Canada 4.1% and France 4.5%.
  • The fund has a 12-month yield of 2.14%.
  • The ETF is down 3.5% over the last month, down 3.9% over the past three months but up 4.3% year-to-date.
  • “Vanguard Total World Stock ETF VT is an ideal core equity holding, as it provides maximum diversification with the convenience of a single security,” according to Micahel Rawson, Morningstar analyst. “Diversification is considered the ultimate way to obtain better risk-adjusted returns, and it would be difficult to find much more equity diversification than VT.”
  • “By adding small caps and emerging markets to the mix, this fund will likely show greater volatility than developed markets in North America, Europe, and the Pacific Rim,” Rawson cautioned. “Higher prospective returns should make that extra volatility worthwhile, but investors should not be surprised to see slightly higher standard deviation of returns on this fund”

The Latest News:

  • Goldman Sachs projects 60% of global growth over the next 10 years will come from Brazil, Russia, India, China, Mexico, Indonesia, South Korea and Turkey, reports Aimee Steen for FTAdvisor.
  • “We think a broad group of countries called the growth markets are going to have a similarly positive impact on the economy [as the BRICs did] over the next decade,” Kate Koch, managing director in Goldman Sachs’ investment management division, said in the article.
  • Koch pointed out that direct investment will be an important way to capture the growth in these countries, which are driven by the changing demographics.
  • “The single most important thing we think is going to drive this growth story is the consumer,” Koch added. “We believe that the growth market consumer is going to add two billion people to the middle class over the next 15 years.”

Vanguard Total World Stock ETF

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Tickers