VTI vs VT: US-Only or Global Diversification?

The Core Difference

Geographic Diversification

VT gives you automatic exposure to markets beyond the United States—Europe, Asia, emerging markets. While the US still dominates (around 60% of the fund), you're also invested in companies from Japan, UK, China, Canada, and many other countries.

With VTI, you're putting all your eggs in one basket: the United States. It's an incredibly strong basket with some of the world's best companies, but it's still just one country.

The Currency Angle

Here's where it gets interesting for non-US investors. Both VTI and VT are priced in US dollars. However, there's a subtle but important difference in currency exposure:

US Companies Are Already Global

An important nuance: many US companies in VTI are global giants. Apple, Microsoft, Google, and Amazon generate significant revenue from international markets. When you buy VTI, you're not just betting on the US economy—you're investing in companies with worldwide operations.

This global nature of US companies means the currency effect is somewhat diminished compared to investing in purely domestic businesses. A strong dollar might hurt Apple's international sales, but their global operations provide natural diversification.

When You're Not a US Investor

If your base currency is EUR, CHF, GBP, JPY, or anything other than USD, geographic and currency diversification becomes even more important. You're already taking currency risk by investing in US-denominated ETFs—why not spread that risk across multiple regions?

VT provides more balanced exposure. When the US market underperforms or the dollar weakens, international holdings may offset some of those losses. Conversely, when the US outperforms (as it has for much of the past decade), you'll capture less of those gains—but you'll also have more stability.

The Home Currency Bias Approach

Some investors deliberately maintain a "home currency bias"—overweighting investments in their local currency. For a Swiss investor, this might mean holding Swiss stocks or bonds alongside international ETFs. For a European, it could mean European-focused funds.

This approach can make sense because it aligns your investments with your future spending. If you'll retire in Europe, having more EUR-denominated assets reduces currency risk. However, this depends heavily on your time horizon and financial goals.

The Bottom Line

VTI offers pure US market exposure with rock-bottom fees. VT gives you the entire world, including the US, with better geographic and currency diversification. For non-US investors, VT's broader exposure can provide valuable risk reduction, especially when combined with some home currency bias.

The good news? Both are excellent, low-cost funds. Your choice between them matters less than simply getting started and staying invested for the long term. And remember: US companies in VTI already operate globally, so even the "US-only" option isn't as concentrated as it might seem.