There’s a trend I’ve been noticing lately…
Investors shunning US markets in exchange for global exposure.
Because apparently… the US market is overheated/overvalued/over-reliant on AI stocks…
So you’ve got people recommending international funds instead…
But once you open the hood, these international funds may be a lot closer to home than you’d expect.
Take Vanguard's Total World Stock Fund - 62% of it is US companies
The name says world… yet 9 out of the 10 largest holdings are the same names you'd get from an S&P 500 fund.
And then these people wonder why their world fund trades the same way as their US names…
Because a fund’s name often tells you nothing about the stocks inside it.
So while you may think a “global” or “international” fund is everything outside of the US… in reality it’s often everything INCLUDING the US.
And because the US is the largest global capital market… naturally the bulk of any global fund is US-centric.
The iShares MSCI World fund is the clearest example, its ten biggest holdings are identical to the S&P 500 - and US companies make up 72% of the entire fund. The next largest country is Japan… which makes up just over 5%.
All because there is simply no law that says the name on the fund has to match what's inside it.
You can fix this in less than 5 minutes though…
If you truly want global exposure, you need to find funds with ex-US in their name.
The Vanguard International Stock ETF (VXUS) is the largest of these
(Although if you’re looking for non-AI trade exposure this won’t help you as the largest 5 stocks inside are all direct AI trade beneficiaries)
Not to hand you a list of funds to buy, but to show you how to understand what these ETFs are… before you part with your hard earned cash
So if you'd rather stop guessing what you own, you can grab the book here
Oliver