Vanguard FTSE All-World ex-US Small-Cap Index Fund

VSS

Market cap $9.73B

The Vanguard FTSE All-World ex-US Small-Cap ETF provides broad exposure to an overlooked but opportunity-rich asset class. The ETF brings even more portfolio diversification to the table than you might expect.

U.S. stocks aren't the only game in town when it comes to small-caps. This ETF is on a multi-year run of trouncing domestic equivalents.

Vanguard FTSE All-World ex-US Small Cap Index Fund ETF shares provides broad international small-cap exposure, with over 4,800 holdings and a low 0.08% expense ratio. Unlike many small-cap ETFs, VSS has a high percentage of profitable holdings — 90%+ among both top and randomly selected sampled positions. The ETF trades at ~26x earnings, which is elevated compared to international large caps (ex-U.S.) and not reflective of its cyclical risks.

Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares has delivered exceptional recent performance, outperforming major indices and offering strong momentum with a 34% rally from its April low. The ETF provides diversified exposure to international small- and mid-cap stocks, with a compelling 13.2x P/E and high 16.6% long-term EPS growth rate. VSS features a low expense ratio, attractive 2.8% yield, and favorable sector mix, making it suitable for both taxable and tax-advantaged accounts.

Investing $50,000 in These 3 High-Yield Vanguard ETFs Can Generate Nearly $2,000 of Passive Income Every Year

In this piece, we'll check in on some of the more underrated exchange-traded fund (ETF) products that may be worth looking into as the great bull market runs for another year.

The Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF tracks small/mid-capitalization companies outside the US, primarily in Europe, Emerging Markets, the Pacific, and Canada. VSS offers a low expense ratio and a well-diversified portfolio. VSS's holdings trade at an attractive P/E ratio while GDP growth prospects are marginally better relative to the US.

Exchange-traded funds (ETFs) have emerged as a favored instrument for investors seeking straightforwardness, outstanding performance, and cost-effectiveness. Vanguard has transformed into a preferred ETF provider, owing to the company's approach that prioritizes the interests of shareholders.

U.S. small-cap stocks have underperformed in recent years, but investing in small-caps outside the U.S. may offer diversification and catch-up momentum potential. Vanguard FTSE All-World ex-US Small-Cap Index Fund ETF Shares allows investors to diversify their portfolios with a low expense ratio and a highly diversified portfolio. The VSS ETF has outperformed similar international small-cap ETFs and offers broad diversification, low expense ratio, and attractive PE ratios, but comes with geopolitical and currency risks.

With so many small and mid-cap ETFs out there, which might be the best to own right now. I'll restrict this analysis to Vanguard ETFs which seem to have a reasonable exchange policy and which offers among the best returns over the long term. My top choices are based on which Vanguard ETF have shown the best returns over the last five years, with the admonition that past returns may not predict the future.