The danger of inflation rates increasing next year and high valuations should be a concern to many investors as a market crash may not be far away. It's never a bad idea to diversify, if for no other reason than to not all have your eggs in one basket.
In addition to investing in different industries, you can also diversify geographically, into emerging markets where the macro-level risk will be different from those in the U.S.
One exchange-traded fund (ETF) that can give you some great exposure outside of the U.S. is the Vanguard FTSE All-World ex-US Index Fund ETF Shares (NYSE Arca: VEU).
The fund is passively managed and has an expense ratio of a miniscule 0.08%. Vanguard rates it as having much more risk than reward, and so investors may not want to put a whole lot of their portfolio into this fund. But for the purposes of long-term growth and diversification, it could still be a good option.
Some of the top stocks in the fund are very safe and stable businesses. The top three holdings are Taiwan Semiconductor Manufacturing Company (NYSE:TSM), Tencent Holdings (OTC:TCEHY), and Samsung Electronics (OTC:SSNLF).
Those are big names but collectively, the fund holds more than 3,600 stocks so no single one is going to heavily impact the ETF. The largest 10 holdings account for just 10.5% of is total assets as of the end of September.
Year to date, the fund has risen 9% and over the past five years, it is up more than 45%.
