There are two popular views on this topic and there are index investing authorities supporting both opinions:
- John Bogle, for example, thinks that US market is a proxy to the global market because half of the income of American companies comes from abroad, and the VTI is cheaper (0.04) than VT (0.11), so he thinks investing in US is good enough diversification.
- Burton Malkiel, on the other side, thinks that even if you invest in VT, you still overweight US and underweight some EM (for example China), because VT doesn’t include many companies that access to is difficult or doesn’t fulfil the standard requirements (in case of China it’s most of their market in fact)
It’s a bit matter of taste because there are good arguments to go both ways. I’m personally on Malkiel’s side and I have VT ETF and I’m planning to buy a better diversified EM (especially China) ETF to better reflect the world market capitalization.
You can compose your portfolio to underweight the countries with excessive regulation and taxes (like EU countries) and/or aging populations (like Japan), but I’d recommend not omitting them completely.