Stock Market Pro Says 'Optimism Pays' In Today's Economy

• Vanguard Total World Stock Index (VT) tracks nearly 10,000 global stocks with a 0.06% expense ratio, returning 22.43% in 2024 and 4.25% year-to-date as Recker's core global holding
• Dimensional Emerging Markets Core Equity (DFAI) surged 34% in 2024 and 7% year-to-date, benefiting from commodity strength, technology growth, and dollar weakness with a factor-based approach
• Dimensional International Small Cap Value (DISV) delivered 47% returns in 2024 and 9% year-to-date with a 3.8% dividend yield, targeting undervalued non-U.S. small companies trading below book value

Market Summary: Global Diversification Strategy Recommended

Key Investment Thesis:

Adam Recker, head of equities at Mather Group ($15 billion+ AUM), advocates for global portfolio diversification amid shifting market dynamics. His central message: "Optimism pays," but investors should pursue balanced rather than concentrated bets despite elevated U.S. valuations.

Three Recommended ETFs:

1. Vanguard Total World Stock Index (VT)

• Tracks ~10,000 global stocks across developed and emerging markets
• Assets: $76+ billion; Expense ratio: 0.06%
• Performance: +22.43% (2024), +4.25% (YTD)
• Described as "closest to neutral, well-diversified global portfolio"

1. Dimensional Emerging Markets Core Equity Market (DFAI)

• Holdings: 3,800+ stocks; Assets: $14 billion; Fee: 0.18%
• Performance: +34% (2024), ~7% (YTD)
• Factor-based approach targeting value and profitability
• Benefits from commodity strength, tech growth, and weakening dollar

1. Dimensional International Small Cap Value (DISV)

• Targets undervalued small-cap companies in developed markets
• Assets: $4.5 billion; Fee: 0.42%; Dividend yield: 3.8%
• Performance: +47% (2024), +9% (YTD)
• Many holdings trading below book value, suggesting mispricing opportunities

Market Context:

After years of U.S. dominance, global stock leadership is broadening. Valuation gaps, dollar weakness, and uneven growth patterns create international opportunities. Higher rates also make shorter-term bonds attractive. Recker emphasizes combining active strategies in less-efficient markets (international, small-cap, fixed income) with passive indexing for efficient U.S. large-caps where outperformance is difficult.