One of the biggest problems facing investors these days — perhaps even more so in recent years — is something market pundits have dubbed “hometown bias.” Essentially, it’s our propensity to favor U.S. stocks over international stocks. The problem is, as we’ve become more of a global and interconnected economy, the U.S. has seen its leadership position slip.
After all, you’re just as likely to drive a German car, grab a cold one from your Korean fridge and watch some TV on your Japanese flat panel. And that’s reflected in the growing world of international stocks.
When looking at the world’s stock market capitalization, back in 2003, the U.S. was the leader and made up around 45% of the total. By 2016, that amount had dwindled to just 36%.
Luckily, the indexing superstars at Vanguard have you covered with their exchange-traded funds. The Malvern, Pennsylvania-based investment powerhouse offers plenty of international funds to help you overcome your hometown bias. Even better, is that the manager recently lowered its expenses on its whole suite of Vanguard ETFs.
And here’s the best part: You only need three of these Vanguard ETFs to basically own the entire world of international stocks and bonds.