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US political climate impacting market performance of ETFs like VGS?

Investing strategy

Hi there, I’m a new investor exploring US shares because of their strong historical performance. I’m curious about how the current political climate in the US could influence US shares and ETFs like VGS? Were there any impacts on the market during Trump’s last term that could provide insights? I’d love to hear your thoughts or experiences!

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Olivia Nguyen

Asked on 21 January 2025

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Pearlie

Thu, 23rd January 2025

Hello! It’s great to hear that you’re exploring US shares and considering their historical performance. The political climate in any country, including the US, can indeed influence the stock market, affecting shares and ETFs like VGS.

During Donald Trump’s presidency, the US stock market experienced significant volatility, influenced by various factors including trade policies, tax reforms, and regulatory changes. For instance, the announcement of tariffs on goods from China led to uncertainty and short-term market dips. However, the market also saw substantial growth phases, driven by tax cuts and deregulation efforts that benefited many businesses.

VGS (Vanguard MSCI Index International Shares ETF) is an ETF that provides exposure to many of the world’s largest companies listed in major developed countries. It’s important to note that while VGS includes US stocks, it is diversified across multiple countries. This diversification can help mitigate the impact of US political events to some extent.

In contrast, VTS (Vanguard U.S. Total Market Shares Index ETF) tracks the CRSP US Total Market Index, which includes over 3,500 US stocks. It offers comprehensive exposure to the entire US equity market, from large-cap to small-cap stocks. The choice between VGS and VTS often comes down to the investor’s desire for geographical diversification versus a focus on the US market. VGS might be preferred by those looking for broader international exposure, while VTS could be more appealing if you’re seeking to maximize exposure to the US economy.

As an investor, it’s crucial to consider how global and national events could impact your investments, and diversification is a key strategy to manage risk. Political climates can change, and their impacts can vary, so a well-diversified portfolio might help in smoothing out those fluctuations.

At Pearler, we understand the importance of aligning your investments with your financial goals and risk tolerance. We offer tools and resources tha

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