Beware the Less-Obvious Risks in Your Portfolio
But don't try to avoid them all, either.
Sometimes bullet points can cause trouble.
For every fund that we review on Morningstar.com, we also provide a few bullet points, meant as quick summaries of the fund's main pros and cons, which we call "Kudos" and "Risks." (The latter used to be labeled "Concerns," but maybe that sounded a bit too touchy-feely, as in, "I'm afraid your fund has some issues ...") These being bullet points, they do not provide complete explanations, just quick hits.
As a result, not long ago I received a message from a reader who was puzzled--to be diplomatic--about my bullet-point comments for two Vanguard foreign funds. For Vanguard Total International Stock Index (VGTSX), which has hefty exposure to emerging markets, I cited that exposure as a risk. Then, for Vanguard Developed Markets Index (VDMIX)--which is essentially the same portfolio minus the emerging markets--I said that one risk is its lack of exposure to emerging markets.
Gregg Wolper does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.