International stocks can be a great addition to any long-term portfolio because they can provide geographical diversification and protect against risks specific to the U.S. economy. And there are some excellent exchange-traded funds (ETFs) that can help you get exposure.
One in particular that could be worth a look is the Vanguard FTSE Developed Markets ETF (VEA +1.46%), which is a broad index fund that focuses on developed countries like Japan, Canada, and the U.K. Here's a rundown of what you need to know about this ETF and what it could potentially do for your portfolio.
Image source: Getty Images.
What is the VEA?
The Vanguard FTSE Developed Markets ETF is an exchange-traded fund that invests in companies located in developed countries, mostly in the Europe and Asia-Pacific regions. The five countries with the most representation in the portfolio include Japan, the U.K., Canada, France, and Germany.
The Vanguard FTSE Developed Markets ETF has about 3,800 stocks in its portfolio and is a weighted index, so larger companies account for more of the weight. However, no company makes up more than 1.3% of this ETF's assets.
NYSEMKT: VEA
Key Data Points
It would be a mistake to assume that because this is an international stock ETF, it's full of companies you've never heard of. In fact, the fund's 10 largest holdings include Nestle, semiconductor equipment giant ASML Holding, Novartis, Toyota, and Novo Nordisk, to name just a few. There are a lot of companies in the ETF's index that are household names to most Americans -- they're just based elsewhere.
Like most Vanguard ETFs, the Vanguard FTSE Developed Markets ETF is a very inexpensive way to invest. It recently reduced its already-low expense ratio to just 0.03%, which means you'll pay just $3 in annual investment fees for every $10,000 in assets.
Performance history
Speaking of performance, here's a look at how the Vanguard FTSE Developed Markets ETF has done over certain time periods.
|
Time Period |
Total Return (Annualized) |
|---|---|
|
1 year |
18.9% |
|
3 years |
15.3% |
|
5 years |
11.4% |
|
10 years |
6.8% |
Data source: Vanguard. Returns as of 6/30/25.
Not only have international stocks had strong momentum recently, as you can see from the chart, but the Vanguard FTSE Developed Markets ETF looks rather inexpensive right now. The average stock owned by the ETF trades for about 16 times earnings, compared to a price-to-earnings ratio (P/E) of about 26 for the typical S&P 500 component.
Could the Vanguard FTSE Developed Markets ETF help you build wealth?
Any ETF's past performance doesn't guarantee future results. With that in mind, total returns of 8%-10% annually aren't unreasonable to expect over the long run. Using the midpoint of this range (9%), this means that a $1,000 investment could grow to about $5,600 over a 20-year period.
However, the best way to use index funds like this one is to invest regularly over time. Using our 9% total return example, a $1,000 investment made every year for 20 years (so $20,000 total) could grow to nearly $57,000.
These numbers are simply to illustrate the long-term potential of the Vanguard FTSE Developed Markets ETF. But the bottom line is that this ETF can be a great way to get exposure to rock-solid international companies at a bare minimum of expense.
