There are warning signs all over the economy, and not just for the purported artificial intelligence (AI) bubble that's threatening to pop. The Trump administration's tariff policies, stubbornly high inflation, and concerns about the affordability of everyday life are having an impact.
The CBOE Volatility index (VIX) is now over 20 after spending most of the year in the teens. The index, also referred to as the fear index, measures call and put options on the S&P 500 to generate a reading. When the VIX is below 20, the market is considered stable.
CNN's Fear and Greed index is another measurement that takes into account indicators such as momentum, stock price strength and breadth, and options trading. That indicator is currently a 14 on a scale of 1 to 100, indicating "extreme fear" in the market.
Image source: Getty Images.
If you believe that the U.S. economy will stumble into correction territory -- or worse -- then an ideal place to turn is the international markets. International stocks can be more appealing, particularly when the power of the dollar falls, because international profits can increase when converted back to U.S. dollars.
A low-cost Vanguard exchange-traded fund (ETF) ideally suited to this investment strategy is the FTSE All-World ex-US ETF (VEU +0.36%). It may be one of the best ways to diversify away from U.S. companies and take advantage of international growth.
About the VEU ETF
The FTSE All-World ex-US ETF is a highly diversified international ETF, holding positions in over 3,800 stocks. Financial services stocks make up 23.9% of the ETF, with other significant positions in industrials, technology, and consumer cyclical stocks.
The market-cap-weighted fund tracks the FTSE All-World ex-US index, which includes mid-cap and large-cap stocks outside the U.S. It includes companies from both developed and emerging markets.
Only one stock has a weighting of more than 3% in the VUE ETF, and only four others have a weighting of more than 1%.
|
Stock |
Portfolio Weight |
1-Year Return |
|---|---|---|
|
Taiwan Semiconductor |
3.33% |
49.8% |
|
Tencent Holdings |
1.43% |
57.6% |
|
ASML |
1.18% |
46.7% |
|
Alibaba Group |
1.08% |
84.3% |
|
Samsung Electronics |
1.00% |
60.6% |
|
SAP |
0.76% |
0.9% |
|
AstraZeneca |
0.70% |
39.9% |
|
HSBC Holdings |
0.69% |
50.3% |
|
Nestle |
0.69% |
17.1% |
|
Novartis AG |
0.66% |
21.5% |
Chart by author. Data source: Vanguard, Y Charts (weightings as of Oct. 31, 2025, returns as of Nov. 24, 2025)
This provides investors with positions in companies that are among the leaders in some compelling growth sectors, including the technology space. TSMC, for instance, is the world's leading semiconductor fabricator, with Apple, Nvidia, Advanced Micro Devices, and Broadcom among its customers. ASML also works with semiconductors and is the only company in the world that has mastered extreme ultraviolet (EUV) lithography technology used to make tiny circuits.
Alibaba is a famous e-commerce company in China and, like Amazon, is growing its cloud computing division. Currently, Alibaba holds a 4% global market share in cloud computing, trailing only Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud.
NYSEMKT: VEU
Key Data Points
How much does it cost to invest in the VEU ETF?
Shares are currently near $70, which means you can pick up a full share for less than $100. This makes it easy to grow your investment over time and acquire additional shares through a dollar-cost-averaging strategy.
The fund is easily outperforming the S&P 500 this year -- a marked turnaround from the last decade.
|
Period |
VEU Total Return |
S&P 500 Total Return |
|---|---|---|
|
Year to date |
24.2% |
13.6% |
|
3 Years |
53.3% |
71.2% |
|
5 Years |
47.9% |
98.7% |
|
10 Years |
111.8% |
276.7% |
Data source: Y Charts.
The fund also has one of Vanguard's lowest expense ratios, at only 0.04%, or $4 annually for every $10,000 invested. You'll also appreciate the ETF's 2.7% dividend yield.
In all, the VEU ETF offers diversification, a strong dividend yield, low expenses, and the advantage of investing overseas when the dollar is weak. It's an ideal Vanguard fund to buy now.
