VT ETF A ETF that captures the whole market

I have been investing in VT for my children education fund and my time horizons is 20 years from now.

Here's a short analysis of VT

First off, VT’s biggest draw is its diversification. With one investment, you’re getting a slice of nearly every investable stock market worldwide—large caps, mid-caps, and small caps included. For a Singaporean investor, this means exposure beyond the local Straits Times Index (STI), which is relatively narrow and heavy on financials and real estate. VT gives you U.S. tech giants, European industrials, and emerging market growth stories, all in one go. If your goal is long-term growth and you want to spread your risk across the globe, this is a compelling feature. Plus, its expense ratio is a razor-thin 0.07%, which is hard to beat for such broad coverage. Over decades, that low cost can make a real difference in your returns.

VT is domiciled in the U.S., and that comes with a catch: a 30% withholding tax on dividends paid to non-U.S. residents. As of early 2025, VT’s dividend yield is around 1.9%. After the 30% tax, that drops to about 1.33% for you. Singapore doesn’t tax capital gains or dividends locally, which is great, but you’re still losing a chunk of that dividend income to the U.S. government. For example, if you invest $10,000, you might expect $190 in dividends annually, but you’d only see about $133 after the withholding. That’s not a dealbreaker if you’re focused on capital appreciation rather than income, but it’s worth noting—especially if you’re comparing VT to alternatives like Ireland-domiciled ETFs (e.g., Vanguard FTSE All-World UCITS ETF, ticker VWRD), which benefit from tax treaties and lower the withholding rate to 15%.

Performance-wise, VT has delivered solid, if unspectacular, returns. Over the past five years (up to mid-2024), its cumulative return was around 66%, or roughly 10-11% annualized. That lags the S&P 500 (which VT includes but dilutes with international stocks), reflecting the U.S. market’s dominance. For a Singaporean investor, this might feel like a trade-off: you’re sacrificing some U.S.-driven upside for global stability. Whether that’s worth it depends on your view of future market trends—will the U.S. continue to outperform, or will international markets catch up?

So, is VT a good fit? If you’re a hands-off investor with a long horizon (10+ years) who values simplicity and global exposure, it’s a strong contender. The low expense ratio and vast diversification are hard to argue with, and the tax hit might not sting too much if you’re reinvesting dividends and banking on growth. But if you’re sensitive to dividend leakage or worried about estate taxes, you might lean toward an Ireland-domiciled alternative like VWRD, which trades on the London Stock Exchange, offers similar global coverage, and softens the tax blow. VWRD’s expense ratio is higher at 0.22%, but the tax savings could offset that over time.

In short, VT is a reliable, cost-effective way to go global, but it’s not perfect for every Singaporean. Weigh your priorities—diversification versus tax efficiency, simplicity versus optimization—and you’ll know if it’s your match.