Is VEA the Smartest Investment You Can Make Right Now?

Exchange-traded funds that way the S&P 500 pull successful the bulk of assets from investors. The Vanguard S&P 500 ETF became the archetypal ETF to apical $1 trillion successful assets successful aboriginal June. The 3 largest ETFs by assets each way the S&P 500. But is this truly the smartest spot to put your wealth close now?

It's smart, for sure, to person a sizable chunk of your portfolio invested successful the S&P 500 -- that volition ne'er change. But close now, a smarter determination mightiness beryllium to put successful an ETF that tracks planetary markets, similar the Vanguard FTSE Developed Markets ETF (NYSEMKT: VEA).

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The Vanguard FTSE Developed Markets ETF invests successful the large developed markets extracurricular the U.S., mirroring the FTSE Developed All-Cap Ex-US index.

The portfolio holds astir 3,870 stocks, spanning the gamut of developed-market planetary stocks. About 50% of the portfolio comes from European stocks, portion 38% are from the Pacific region. Around 11% are from North America, excluding the U.S., portion 1% are from the Middle East.

The apical 3 holdings are 2 Korean tech giants, Samsung and SK Hynix, and the Netherlands-based semiconductor banal ASML.

Why VEA is simply a must-own

Over the past 12 to 18 months, planetary stocks person outperformed their U.S. counterparts, arsenic investors person rotated retired of overvalued U.S. ample caps into cheaper planetary markets with maturation catalysts.

VEA is up astir 15% twelvemonth to date, portion the VOO is up astir 10%. Over the past year, VEA is up 28% portion VOO has returned astir 26%. Over the longer term, the Vanguard S&P 500 ETF has comfortably outperformed VEA, but U.S.-based tech stocks person fueled the bull market.

But that whitethorn beryllium changing. According to galore Wall Street experts, including those astatine Vanguard, planetary stocks are expected to outperform U.S. stocks implicit the adjacent decade.

Vanguard strategists expect higher returns for international, developed-market, ex-U.S. stocks than U.S. ample caps implicit the adjacent 10 years. Strategists astatine Charles Schwab and Goldman Sachs, among others, accidental the aforesaid thing. There is simply a confluence of factors anticipated to lend to planetary banal outperformance.

The strategists mention overvalued U.S. ample caps, a weakening U.S. dollar, and the broadening of artificial quality (AI) beyond U.S. ample caps into planetary markets. There are besides imaginable tailwinds from favorable argumentation changes, accrued defence spending, and investments successful Europe and the Pacific.