By Globalfinserve
ETF Investing Gains Traction Amid Market Uncertainty
With increasing market volatility and geopolitical risks affecting the U.S. economy, investors are seeking safer avenues for portfolio diversification. One promising option is the Vanguard FTSE All-World ex-US Index Fund ETF (NYSEMKT: VEU). This fund, which focuses on international equities, offers a low-cost way to gain exposure to global markets outside the U.S., making it a smart pick for risk management and long-term growth.
Fund Overview: What Makes VEU Attractive?
The Vanguard FTSE All-World ex-US ETF provides access to thousands of international stocks, enabling investors to diversify beyond the U.S. market. Here’s what makes it appealing:
✅ Broad Diversification:
The ETF holds more than 3,800 stocks across developed and emerging markets. This vast range reduces the risk associated with individual companies or regions underperforming.
✅ Low Expense Ratio:
VEU charges an expense ratio of just 0.04%, making it an affordable option for long-term investors. Low fees help preserve more of your returns over time, making this ETF cost-effective compared to many actively managed international funds.
✅ Balanced Exposure:
- 41% of holdings are in European stocks.
- 26% are in emerging markets.
- 25% are from the Pacific region.
This diverse exposure provides a hedge against the potential underperformance of any single region.
Top Holdings: Stability Through Diversification
The fund offers broad exposure to large-cap international equities, with its largest holding being Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), accounting for less than 3% of the total portfolio. Other significant holdings include:
- Nestlé SA (Switzerland)
- Samsung Electronics (South Korea)
- Roche Holding AG (Switzerland)
- ASML Holding NV (Netherlands)
Unlike many U.S.-focused ETFs, VEU avoids over-concentration in a few tech giants, reducing the risks associated with high sector-specific exposure.
Performance Comparison: How Does VEU Stack Up Against the S&P 500?
Although the S&P 500 has traditionally outperformed many international ETFs, VEU’s performance in 2025 suggests that global diversification may offer better returns in the face of U.S. market headwinds.
✅ Valuation Advantage:
The ETF has a price-to-earnings (P/E) ratio of less than 16, making it relatively undervalued compared to the S&P 500, which trades at a P/E of 23. This lower valuation may appeal to investors seeking value-oriented investments, especially during periods of market uncertainty.
✅ Recent Outperformance:
In early 2025, VEU has outperformed the S&P 500, signaling a potential shift toward non-U.S. equities. This could indicate that investors are seeking stability through geographical diversification and reduced U.S. market exposure.
Why Consider VEU for Your Portfolio?
- Lower Correlation with U.S. Markets:
Investing in non-U.S. equities reduces correlation with the U.S. stock market, which can help stabilize your portfolio during domestic downturns. - Inflation Hedge:
Global exposure offers a hedge against U.S. inflation and interest rate fluctuations. - Potential for Growth in Emerging Markets:
With 26% exposure to emerging markets, VEU offers growth potential in regions like Asia, Latin America, and Eastern Europe, which may outpace developed markets over time. - Currency Diversification:
Investing internationally allows you to diversify currency exposure, reducing risks tied to the U.S. dollar’s fluctuations.
✅ Key Takeaway: A Balanced Addition for 2025
The Vanguard FTSE All-World ex-US ETF (VEU) offers a compelling case for investors seeking diversification, stability, and exposure to international markets. With its low expense ratio, broad holdings, and strong early-year performance, VEU is a practical choice for mitigating U.S. market risk and capturing global growth opportunities.
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