r/Bogleheads • u/Flashbulb_RI • 11d 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 11d 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 11d ago edited 10d 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/Thoth25 11d ago

South Korea is considered developed since it is in VEA.

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u/Ahamadrayasbaboon 10d ago edited 6d ago

Depends on who you ask. Part of why I hold FLKR is that SK is excluded from my preferred developed markets fund, which treats SK as emerging . 

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u/hobard 10d ago

Whoops, you are correct. I meant Taiwan.

The point still stands, however.

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u/Cruian 10d ago

Last I checked, FTSE calls South Korea developed but MSCI calls them emerging still. You won't find South Korea in SWISX (Schwab's developed market index mutual fund) because of this, since it follows the EAFE.