IVV and VDHG

Question

Is it okay to hold both IVV and VDHG? I know VDHG is more diversified but I would like more access to US market as well. Pros and Cons anyone. Thank you 😊

Answer

Hi Iris.

VDHG does already have quite a large allocation to US shares.

You might already know this, but that’s because VDHG is heavily invested in international companies, most of which is made up by US shares.  Likely around 40% or so.

If you would like more exposure than that in your portfolio, then adding IVV would achieve this.  So there’s nothing wrong with it if that’s the plan.

Hope that helps.
Dave

Answer

Holding both IVV and VDHG can be a strategic choice depending on your investment goals and risk tolerance. Here’s a breakdown of the pros and cons of holding both these investment options:Pros:1. Enhanced Exposure to the US Market: IVV, which tracks the S&amp;P 500, provides concentrated exposure to large-cap U.S. stocks. This can be beneficial if you believe in the strong performance of the U.S. economy and its companies.2. Diversification: VDHG, being a diversified, multi-asset fund that includes not just U.S. stocks but also stocks from around the world, bonds, and other assets, offers broad diversification. This can help in reducing risk as the performance of different asset classes can offset each other.3. Simplicity in Diversification: VDHG simplifies the process of diversification across asset classes and geographies, which might otherwise require multiple funds or more complex portfolio management.4. Balancing Volatility: The broader diversification of VDHG can potentially balance the volatility inherent in the more focused IVV, which is restricted to U.S. equities.Cons:1. Overlap in Holdings: There is likely some overlap in the U.S. equities between IVV and the equity component of VDHG. This could mean a higher concentration in certain stocks than intended, potentially increasing your exposure to specific sector or market risks.2. Cost Considerations: Holding multiple funds can lead to higher total expense ratios (TERs) compared to holding a single fund. It’s important to consider how the costs of holding both funds impact your investment returns.3. Complexity in Tracking: Managing and tracking multiple investments can be more complex than holding a single fund, requiring more time and a better understanding of how each fund fits into your overall investment strategy.In conclusion, holding both IVV and VDHG can be a good strategy if you’re looking to balance U.S. market exposure with broad international and asset class diversification. It allows you to tailor your portfolio more precisely to your investment outlook and risk tolerance.For Pearler users, this approach aligns well with the platform’s focus on long-term investing and building diversified portfolios. Pearler’s tools and features can help you manage and track your investments efficiently, making it easier to maintain a portfolio that includes both IVV and VDHG.You can find out more about this topic here: Investing Q A Strong Money AustraliaDisclaimer:I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

Answer

Holding both IVV and VDHG can be a strategic choice depending on your investment goals and risk tolerance. Here’s a breakdown of the pros and cons of holding both these investment options:Pros:Enhanced Exposure to the US Market: IVV, which tracks the S&amp;P 500, provides concentrated exposure to large-cap U.S. stocks. This can be beneficial if you believe in the strong performance of the U.S. economy and its companies.Diversification: VDHG, being a diversified, multi-asset fund that includes not just U.S. stocks but also stocks from around the world, bonds, and other assets, offers broad diversification. This can help in reducing risk as the performance of different asset classes can offset each other.Simplicity in Diversification: VDHG simplifies the process of diversification across asset classes and geographies, which might otherwise require multiple funds or more complex portfolio management.Balancing Volatility: The broader diversification of VDHG can potentially balance the volatility inherent in the more focused IVV, which is restricted to U.S. equities.Cons:Overlap in Holdings: There is likely some overlap in the U.S. equities between IVV and the equity component of VDHG. This could mean a higher concentration in certain stocks than intended, potentially increasing your exposure to specific sector or market risks.Cost Considerations: Holding multiple funds can lead to higher total expense ratios (TERs) compared to holding a single fund. It’s important to consider how the costs of holding both funds impact your investment returns.Complexity in Tracking: Managing and tracking multiple investments can be more complex than holding a single fund, requiring more time and a better understanding of how each fund fits into your overall investment strategy.In conclusion, holding both IVV and VDHG can be a good strategy if you’re looking to balance U.S. market exposure with broad international and asset class diversification. It allows you to tailor your portfolio more precisely to your investment outlook and risk tolerance.For Pearler users, this approach aligns well with the platform’s focus on long-term investing and building diversified portfolios. Pearler’s tools and features can help you manage and track your investments efficiently, making it easier to maintain a portfolio that includes both IVV and VDHG.You can find out more about this topic here: Investing Q A Strong Money AustraliaDisclaimer:I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

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Dave Gow - Strong Money Australia

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