One does rather suspect the American investor, bless his heart, hasn’t entirely noticed. While Wall Street preens, the rest of the world has been, well, actually performing. Year to date, the S&P 500 is flatter than a week-old champagne cork – up a mere 0.5%. The Nasdaq-100, darling of the tech set, is down 1.2%. Quite tiresome, really. However, the Vanguard Total International Stock ETF (VXUS), has been enjoying a decidedly more robust 11% gain. One begins to wonder if the transatlantic cable is functioning properly.
A Four-to-One Proposition
According to a recent dispatch from Bank of America – and one trusts their analysts have access to more than just tea leaves – a rather significant flow of funds is occurring. So far this year, $104 billion has drifted towards international developed markets – Europe, Japan, that sort of thing. A paltry $25 billion, by comparison, has stayed put in the States. Four times as much, you see. One almost feels sorry for the bulls on Broadway.
BofA’s Michael Hartnett, a man who clearly understands the drama of it all, has declared 2026 a “new world order.” A bit theatrical, perhaps, but not entirely inaccurate. Investors, it seems, are tiring of the American preoccupation with itself and are casting their nets a little wider. Avoiding the dollar, naturally. One can hardly blame them.
A weakening dollar, should it occur, isn’t necessarily a catastrophe for the American investor. Quite the opposite, in fact. Those foreign holdings suddenly become a bit more… agreeable. If you own a share of a European firm priced in euros, and the dollar loses, say, 10% against the euro, that share suddenly becomes 10% more valuable when translated back into dollars. A rather neat trick, wouldn’t you say?
Diversification, Darling
If one is seeking a means to diversify – and really, who isn’t? – or simply to protect one’s savings from a potentially declining dollar, a foray into international equities might be just the thing. The Vanguard Total International Stock ETF (VXUS) offers a particularly convenient route.
It grants exposure to a staggering 8,691 stocks, representing a remarkably broad swathe of the global economy. Europe, the Pacific Rim, the Middle East, emerging markets – it’s all there. Japan accounts for 15.1% of the fund, the United Kingdom 9%, China 8.5%, Canada 7.8%, and Taiwan 6.4%. A rather cosmopolitan mix, wouldn’t you agree?
The fund holds some of the world’s most innovative – and, let’s be honest, successful – companies. Taiwan Semiconductor Manufacturing (3.2% of the fund), Samsung Electronics (1.2%), Alibaba Group (0.9%), Toyota Motor (0.6%), and countless others. And the expense ratio? A delightfully low 0.05%.
Interestingly, this international ETF is currently cheaper than its American counterparts, sporting a price-to-earnings ratio of only 19.1, compared to the S&P 500’s 27.6. If one is inclined to diversify and capitalize on a potential rebalancing in global stock markets, VXUS might prove a rather sensible choice for the long-term investor. Though, one does hope it isn’t too exciting. A little excitement is all very well, but one prefers a portfolio that doesn’t give one palpitations.
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2026-03-05 22:02