Key insights
- The post discusses the nuances of diversification using ETFs like VOO, VTI, FZROX, VXUS, and FZILX. It questions the rationale behind investing in highly overlapping ETFs (e.g., VOO and VTI) versus a single ETF with a similar exposure. The potential for marginal outperformance is explored, but the overall impact on US equities is slightly negative due to the potential for investor confusion and suboptimal asset allocation.
Hi all,
I've been seeing a lot of top stocks being discussed and which one is the "better" one to invest in. For example, VOO vs VTI. I understand they have different compositions, so for a more direct comparison, VTI vs FZROX / VXUS vs FZILX. I also know that it's kind of a blackbox for how Fidelity manages their FZ--- stocks, whereas the Vanguard ones are public and clear.
From what I've seen, people usually invest in one or the other, not both. But I guess I can't seem to understand why not invest in both?
I'm thinking about a scenario like I invest equally in both:
VOO - $500 and
VTI - $500
So given their overlap, isn't this nearly the same as investing all my money in just one ETF, like:
VOO - $1000 or VTI - $1000
By investing in both, maybe you can reap the partial benefits of one outperforming the other? I'd love to learn more about this, so thanks to anyone who responds.