"It's not easy to beat the incredibly popular Vanguard Total Stock Market Index Fund ETF ( NYSEARCA:VTI), an ETF that's even broader than the S&P 500, in any given year. And while those with the ambitious goal of topping the VTI may gravitate towards some of the market's more aggressive growth plays out there, which includes the likes of the up-and-coming AI and AI energy stocks that power the hyperscalers, I'd argue that there's also value in stashing away some defensive and internationally-focused ETFs."
"Indeed, as you may know by now, the risk-on growth stocks have more room to gain in bull markets, but the pain is also amplified once the next bear market hits. Arguably, even a modest correction could have the potential to be severe for the high-flying names that have already doubled up many times over the past couple of months."
VTI is a broadly diversified U.S. market ETF that is difficult to outperform in any single year. Risk-on growth stocks have greater upside in bull markets but suffer amplified losses during corrections and bear markets. Even a modest correction can be severe for highly run-up names. Chasing momentum increases vulnerability to sharp drawdowns. Defensively positioned and internationally focused ETFs can act as relative outperformers when market sentiment reverses. Playing defense typically reduces upside during concentrated tech-driven rallies, but some defensive funds can still top broad-market benchmarks year-to-date. Examples include the Schwab International Dividend Equity ETF.
Read at 24/7 Wall St.
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