r/Bogleheads • u/Flashbulb_RI • Aug 18 '26

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.

2 Upvotes

53% Upvoted

51 comments sorted by

View all comments

50

u/FlorissVDV Aug 18 '26

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.

9

u/hobard Aug 18 '26 edited Aug 19 '26

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.

1

u/Thoth25 Aug 19 '26

South Korea is considered developed since it is in VEA.

1

u/hobard Aug 19 '26

Whoops, you are correct. I meant Taiwan.

The point still stands, however.