A Spot of Bother with the Funds

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One finds oneself, these days, pondering the market’s little wobble with a sort of detached amusement. A buying opportunity, you say? Quite possibly. Though one must confess, the notion of ‘bottoms’ fills one with a vague sense of unease. Still, a dip in prices is always a capital idea, provided one has the wherewithal to take advantage of it. The question, naturally, is which fund to favour. The SPDR S&P 500 ETF Trust (SPY 0.72%) and its practically identical twin, the Vanguard S&P 500 ETF (VOO 0.71%), are ever-popular chaps, of course. But one suspects a dash more international flavour might be the ticket at present, something like the Vanguard Total World Stock ETF (VT 0.68%). A wider net, you see, and all that.

Precisely What It Sounds Like

The Vanguard Total World Stock ETF, as the name rather gives away, owns shares in companies scattered about the globe like confetti. It’s built to mimic the FTSE Global All Cap Index, which is a mouthful, and holds stakes in over ten thousand equities – a positively staggering number! Many of these, one dares say, are companies one has never encountered, and likely never will encounter. A bit like distant cousins one meets only at funerals, really.

Roughly two-thirds of this fund’s value resides in North America (mostly U.S. listings, naturally), while Europe accounts for a respectable 15%. Asia-Pacific and emerging markets each contribute around 10% to the pot. Which is to say, about a third of the fund’s holdings aren’t entangled in the S&P 500. A rather significant distinction, wouldn’t you agree?

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Now, one might ask, given the recent American exuberance in the market, why tinker with a perfectly good thing? Well, nothing lasts forever, does it? Change is the only constant, as someone rather cleverly observed. And one can’t help but suspect we’re teetering on the brink of a shift in global leadership. A bit of a rearrangement of the deckchairs, if you will.

Vanguard’s analysts, a remarkably sensible bunch, are making precisely this argument. Their Global Chief Economist, Joe Davis, recently declared, in a rather forceful report, that “despite the glamour of the tech-heavy U.S. equity market, more compelling investment opportunities are emerging in high-quality fixed income, U.S. value, and ex-U.S. equity even for those investors most bullish on AI’s prospects.” A rather pointed observation, wouldn’t you say? His bottom line? Long-term investors will benefit from a portfolio that’s a bit more…globally inclined.

It’s not merely Vanguard, either. Michael Hartnett at Bank of America/Merrill Lynch feels much the same. He posits that AI disruption is more likely to cause a spot of bother for the services-heavy American economy than for the manufacturing-focused economies of Europe and emerging markets. He expects the U.S. market to lag behind the rest of the world for the foreseeable future. A rather gloomy prediction, but one can’t help but respect his candour.

A Strategically Sound Option at This Time

The Vanguard Total World Stock ETF isn’t the only way to capitalize on this potential shift. The Vanguard Total International Stock ETF (VXUS 0.78%) eschews American stocks entirely, which is a rather bold move, and the Vanguard FTSE All-World ex-US ETF (VEU 0.73%) does the same. These would both be capital ideas if you’re looking to capitalize on the brewing shift, or a sensible addition if you already own SPY or VOO.

If you haven’t yet dipped a toe into the world of broad index funds, and simply wish to take advantage of the recent market dip, VT is, in this humble observer’s opinion, a decidedly better bet than the SPDR S&P 500 ETF Trust. A touch of diversification, you see, is always a capital idea. It’s simply good sense.

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2026-03-18 20:05