Very few companies can hold a candle to Vanguard when it comes to ETFs. If you're looking to expand your investment portfolio by gaining exposure to international markets, Vanguard FTSE Developed Markets ETF (NASDAQ:VEA) offers an efficient way to do so in a low-cost manner. In this guide, we'll walk you through how to invest in VEA, its potential benefits, and factors to consider before purchasing.
What is it?
What is the Vanguard FTSE Developed Markets ETF (VEA)?
The Vanguard FTSE Developed Markets ETF (VEA) is an exchange-traded fund (ETF) that provides investors with exposure to stocks from developed markets outside the U.S., including Europe, Asia, and Australia. It holds a diversified portfolio of more than 4,000 companies, spanning various industries and countries, offering broad international diversification. Known for its low expense ratio and consistent dividend yield of around 3.2%, VEA is a cost-effective choice for long-term and income-focused investors.
Exchange-Traded Fund (ETF)
How to invest
How to Buy Vanguard FTSE Developed Markets ETF (VEA)
- Open your brokerage app: Log into your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker or ETF name into the search bar to bring up the ETF's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected, and adjust your investment strategy accordingly.
ETF holdings
Holdings of Vanguard FTSE Developed Markets ETF (VEA)
VEA holds more than 4,000 stocks, making it a highly diversified fund focused on developed markets outside of the United States. Its largest holdings include well-known companies across Europe, Asia, and other regions. Here are some of the fund's key holdings:
- Nestle S.A. (NSRGY 1.17%)
- ASML Holding N.V. (ASML -3.0%)
- Samsung Electronics Co., Ltd. (SSNL.F 9.01%)
- Toyota Motor Corporation (TM -2.01%)
- Shell PLC (SHEL -0.06%)
These holdings represent prominent companies in industries such as consumer goods, technology, and automotive manufacturing. The breadth of the VEA's holdings ensures exposure to a variety of sectors and geographies, which makes it very appealing to international investors.
Should I invest?
Should I invest in Vanguard FTSE Developed Markets ETF (VEA)?
Investing in VEA can be a smart move if you're looking to gain broad exposure to developed international markets. Here are some reasons why it might be right or wrong for you, along with factors to consider before investing.
When you might consider investing in VEA
You want international exposure
VEA is an excellent way to diversify beyond U.S. markets by investing in companies located in developed economies such as Japan, Germany, and the U.K. Investing in developed markets outside of the U.S. is a great way to gain exposure to different currencies and growth trajectories without the risks of emerging markets. For example, investing in Japan-based companies is a great way to gain exposure to Asia without the risk and dubious information that you might find in developing markets.
You prefer low-cost investing
Vanguard is known for its low-expense-ratio ETFs, and VEA is no exception. It charges a minimal annual fee, making it a cost-effective option for long-term investors. This holds particularly true for those looking for a long-term option for retirement, either by investing a lump sum and letting it sit there, or drip-feeding it over time.
You're seeking broad diversification
VEA covers companies from multiple countries and sectors, which can help reduce risk and provide exposure to global growth opportunities. It holds a vast basket of stocks that encompass everything from technology to heavy industry, which is great for diversification.
When you might avoid investing in VEA
You are looking for high growth
While VEA offers solid returns, it may not be the best choice if you're seeking the rapid growth potential seen in emerging markets like Vietnam or Malaysia. As VEA's stock selections consist of stocks located in developed markets, there will always be less growth potential than those of developing markets.
You prefer U.S.-focused investments
Maybe you are extremely patriotic, and you shudder at the thought of your hard-earned dollars leaving the U.S. to be invested in far-flung locations. If you're more comfortable with the U.S. market or seek investments that cater to local market trends, VEA's international focus may not be the right fit.
You're concerned about currency fluctuations
Since VEA invests in international markets, the value of the ETF can be influenced by changes in foreign exchange rates. This adds a layer of volatility compared to purely domestic investments, and this can sometimes be substantial. One example of this is the 2016 Brexit vote, in which the aftermath saw the pound taking a dramatic dive when compared with the dollar. On the one hand, existing U.K. assets lost value in dollar terms, but it also created an opportunity for investors like VEA to buy U.K. assets at a discount.
Dividends
Does Vanguard FTSE Developed Markets ETF (VEA) pay a dividend?
The Vanguard FTSE Developed Markets ETF (VEA) is an ETF that pays a dividend. As of late 2024, its dividend yield was approximately 3%. The fund distributes dividends quarterly, reflecting the income generated by the underlying securities in the ETF. Historically, its dividend payments have been consistent, making it an attractive option for income-focused investors and those who crave stability.
ETF expense ratio
What is the Vanguard FTSE Developed Markets ETF (VEA) expense ratio?
The expense ratio of VEA is 0.06%, which is very low compared to the industry average for similar funds (around 0.18%). In general, Vanguard ETFs have some of the lowest expense ratios out there.
Expense Ratio
Historical performance
Historical performance of Vanguard FTSE Developed Markets ETF (VEA)
VEA has delivered steady returns over different time frames. Below is its historical performance as of late 2024:
| 1-Year | 11.20% |
| 3-Year | 7.80% |
| 5-Year | 6.40% |
| 10-Year | 7.10% |
Related investing topics
Bottom line: VEA won't awe you, but it's a low-risk way to diversify
Compared to the immense growth opportunities in the developing world, VEA won't exactly blow you away with its returns. That being said, it's a great way to gain exposure to equities outside the U.S., which is important for diversifying a portfolio and mitigating risk.
When building a portfolio, the name of the game is to have a mix -- international vs. domestic, low risk vs. high risk, etc. If you are on the hunt for a low-cost ETF but want to add something different to your portfolio, VEA's historical returns have been solid.
That's not to say that the developed world outside of the U.S. doesn't have problems that could impede their future, with demographics and low birthrates being a primary issue. Still, some of the largest and most important companies in the world are still based in Europe and Asia, and those companies will continue to have a major footprint for years to come.
FAQ
Is VEA a good ETF?
VEA is widely regarded as a strong ETF for investors seeking international diversification. Its low expense ratio, broad exposure to developed markets outside the U.S., and consistent historical performance make it a reliable choice for long-term portfolios.
What is Vanguard's VEA ETF?
The Vanguard FTSE Developed Markets ETF (VEA) is an exchange-traded fund designed to track the performance of large- and mid-cap stocks in developed markets outside the U.S. and Canada. It provides exposure to companies from regions such as Europe, Asia, and other developed economies, offering a diversified global investment opportunity.
Does VEA pay a dividend?
The fund distributes dividends quarterly, reflecting the income generated by the underlying securities in the ETF. In late 2024, the dividend was 3%.
How can I buy a Vanguard ETF?
You'll need to open a brokerage account, do due diligence, decide on your budget, and then make a purchase using the instructions from this article. Vanguard has different ETFs, but the process for purchasing them remains more or less the same.
