If you want broad diversification outside of North America, then I've got the investment for you. The Vanguard Total International Stock Index Fund (NASDAQ:VXUS) is a huge exchange-traded fund that had nearly 7,900 stocks in its portfolio as of the end of February. Outside of the top two stocks – Taiwan Semiconductor Manufacturing (NYSE:TSM) and Nestle (OTC:NSRGY) – every other stock makes up less than 1% of the total fund's weight.
That can be both good and bad news for investors. On the positive, you don't have to worry about bad news about a particular stock weighing down the fund. But on the flip side, the negative is that it's also hard to move the needle unless the entire market is moving in the same direction. Even a big move by Taiwan Semiconductor is going to have a limited effect on the ETF, because the stock only accounts for 1.4% of the fund's weight.
Just 7.3% of the portfolio's holdings come from North America. The fund's largest representation comes from Europe at 41%, followed by the pacific at 26% and emerging markets at just under 25%. Another benefit of investing in the ETF is that its expense ratio is a miniscule 0.07%, which is cheap compared to most funds.
Over the past 12 months, the fund has proven to be a safe place to invest in. Including its dividend, the ETF's total returns are a negative 7.5%, which is slightly better than the S&P 500, with its total returns being a negative 11%. For investors who are bearish on the North American market, the Total International Stock ETF can be a good way to hedge and diversify away some of your risk.
