VGS and Nvidia?

Hello! It’s great to hear that you’re starting your investment journey with a focus on ETFs like VGS and VAS. These are popular choices for diversification and exposure to a broad range of sectors and geographies.

Regarding your interest in investing directly in Nvidia (NVDA), it’s important to consider how this fits into your overall investment strategy. VGS, as you mentioned, already includes Nvidia as part of its holdings since it tracks the MSCI World ex-Australia index, which covers major developed markets and includes large and mid-cap stocks like Nvidia.

Investing directly in Nvidia would indeed increase your exposure to this specific company. This isn’t necessarily a bad choice, but it does concentrate your investment more heavily in the technology sector and particularly in one company. This could increase your risk if the tech sector or Nvidia experiences a downturn.

However, if you believe strongly in Nvidia’s potential for growth beyond what is reflected in its current index weighting, buying shares directly could capitalize on this belief. It’s a way to «overweight» a particular stock in your portfolio, potentially increasing your returns if your analysis proves correct.

It’s also worth considering the balance of your portfolio. With VGS and VAS, you have broad exposure, so adding a specific tech stock like Nvidia can be seen as a strategic move to tilt your portfolio more towards a sector you believe will outperform.

In summary, while adding Nvidia to your portfolio when you already own it through VGS does increase your exposure to this single stock, it can be a strategic decision if aligned with your investment goals and risk tolerance. It’s all about how you want to balance diversification against potential returns from specific sectors or companies.

As you continue to explore investment options, Pearler can be a valuable platform to manage your investments, offering tools and resources to help you make informed decisions and track your portfolio

Show more.....

Hi Tom,

It would technically be doubling up, since Nvidia is already one of the biggest companies inside VGS.

There isn’t really anything wrong with this I guess if you really want super extra exposure to Nvidia.

As for whether it’s a bad choice, that will only be knowable in hindsight after we see how Nvidia performs over the next few years or so. It’s an unanswerable question.

The potential for higher growth might be found with a smaller tech stock which isn’t as big or popular yet. So maybe see if there are any others you also like. But regardless, if that’s your favourite company, then I don’t see any issue with having an extra piece of it in a portfolio.

All the best.