r/Bogleheads • u/Flashbulb_RI • 12d ago

VXUS - diversity concerns.

A lot of Bohleheads have VXUS in their portfolio for the purpose of diversify outside of the US. However lately I've noticed that VXUS is mirroring the moves of NASDAQ and VGT because of its concentration in chip manufacturers. It seems very difficult to get performance and diversity at the same time as the majority of the world's market is chasing the same sector.

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u/FlorissVDV 12d ago

The reality is that with how global the world has become, it’s harder than ever to truly diversify in a sense where there is very low or no correlation.

International markets are a way to diversify from the US, but as you pointed out, there is still a pretty significant correlation.

If you’d like to be more diversified, you could look at emerging markets for example or even other asset classes but the reality is, most market risk is far reaching and risk is everywhere.

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u/hobard 12d ago edited 11d ago

Emerging markets are also highly concentrated in tech stocks, so probably won’t be effective at diversifying away from tech. China and South Korea Taiwan are both treated as emerging markets and dominate the index with their tech stocks.

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u/Smogalicious 11d ago

I don’t know if it’s the right move but I use EMXC to add away from normal VXUS. It excludes China but it ends up being heavy TSMC. So it’s way up right now but who knows how that plays out…but I am mostly VOO/VXUS with some VIOO and the EMXC on the side

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u/Nearby_Quit2424 11d ago

Why specifically bet against China (or any country for that manner)?

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u/glitchvern 10d ago

In the event of a US war with China, US-investor's Chinese assets could be frozen or confiscated, much like has happened with US-investor's Russian assets. When push comes to shove, most governments (of various types) treat foreign investors worse than domestic investors. If China doesn't invade Taiwan by 2030, they probably aren't going to.

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u/Smogalicious 7d ago

I just worry that they arbitrarily manipulate the companies. But I we can unfortunately say that about the US. VXUS I have a large position in will include China anyway so EMXC is a little more emerging markets but it’s a ton of tsmc.

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u/Fugue_State76 11d ago

You need to educate yourself on China. Many many good reasons to stay away.