Vanguard Total International Stock ETF

VXUS

Market cap $155B

The author assigns a "hold" rating to VXUS, projecting accelerated growth combined with persistent inflation in the second half of the year—an unfavorable scenario for global ex-US equities; The US accounts for 64% of global market cap (up from 42% in 2008), supported by earnings that exceed the rest of the world. US, Japan, Eurozone, and ex-US equities are trading above their historical P/E averages, only emerging markets appear to be at fair value.

The Vanguard Total International Stock ETF (NASDAQ:VXUS) is the default choice for most investors who want exposure to companies outside the United States.

An international equity sleeve inside a taxable account has a quieter tax drag than a business development company (BDC) or mortgage real estate investment trust (REIT), but it is not trivial.

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The iShares Core MSCI EAFE ETF (IEFA) invests only in developed market stocks outside of the United States and Canada. The Vanguard Total International Stock ETF (VXUS) offers more comprehensive global coverage across both developed and emerging markets.

You pull in $200,000 a year, your checking account looks healthy, and yet your “investments” consist of a 401(k) you barely glance at and a savings account quietly losing ground to inflation.

Open your brokerage app and check the allocations. If you own a target-date fund, an S&P 500 index fund, or a portfolio your advisor built in the last decade, odds are nine out of every ten dollars sit in US stocks.

The phenomenal success of the biggest U.S. technology stocks means investors probably have heavy exposure to the American economy. With the S&P 500 index's valuation at a historically expensive level, investors might think about adding international exposure.

These popular Vanguard ETFs offer exposure to both developed and emerging markets. The Vanguard FTSE All-World ex-US Small-Cap ETF has generated higher annualized returns over time.

The Vanguard Total International Stock ETF is trading at a steep discount to its U.S. counterparts. International stocks have underperformed by a wide margin over the past decade.