“These types of funds provide investors with diversified access to the entire investment opportunity set that active managers select from and make no active bets on specific regions, countries, sectors, or individual stocks,” said Morningstar. “This type of approach essentially free-rides on the collective opinions of active investors.”
VT and rival funds are not likely to deliver to jaw-dropping short-term returns, but over the long-term, VT’s low costs give it an advantage.
“The weight of a given stock, country, or sector will therefore be an outcome of their collective judgment. As a result, this type of fund likely won’t be a top performer over short periods of time. However, its low fee should give it a long-term edge,” according to Morningstar.
Morningstar has a Silver rating on VT.
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