International Portfolios: A Question of Taste

by

The current enthusiasm for anything beyond the American shore is, naturally, a temporary affliction. One observes the herd, stampeding towards ‘international exposure’ as if the very concept were a panacea. Vanguard’s FTSE Developed Markets ETF (VEA) and iShares MSCI ACWI ex US ETF (ACWX) represent, in their respective ways, attempts to cater to this peculiar frenzy. The question, as always, is not so much whether to venture abroad, but how – and, more importantly, whether one can bear the inevitable disappointments.

Both funds offer a means of participating in the global charade, though with markedly different degrees of sophistication – or, perhaps, lack thereof. VEA, the more austere of the two, confines itself to the developed world – a realm of predictable stagnation and polite corruption. ACWX, with a touch of the gambler’s spirit, extends its reach into the emerging markets – a landscape of breathtaking opportunity and equally breathtaking risk.

A Snapshot of Propriety

Metric VEA ACWX
Issuer Vanguard iShares
Expense Ratio 0.03% 0.32%
1-yr Return (as of 2026-01-09) 35.8% 34.2%
Dividend Yield 3.1% 2.7%
Beta 1.05 0.75
AUM $268.9 billion $7.87 billion

The disparity in expense ratios is, shall we say, instructive. VEA, with its almost indecent economy, suggests a certain ruthlessness in cost control. ACWX, by contrast, appears to operate on the assumption that investors are willing to pay a premium for the illusion of wider opportunity. The dividend yield, a paltry difference, is scarcely worth mentioning.

Performance: A Fleeting Impression

Metric VEA ACWX
Max Drawdown (5 y) -29.70% -30.06%
Growth of $1,000 over 5 years $1,331 $1,267

The Composition of Hope and Fear

ACWX, with its 1,751 holdings, presents itself as a comprehensive survey of the non-American world. Its leading positions – Taiwan Semiconductor Manufacturing, Tencent, ASML – reveal a distinct bias towards Asia and the more speculative corners of the emerging markets. VEA, with over 3,800 stocks, favours the familiar comforts of Europe, Canada, and the Pacific Rim. ASML, Samsung Electronics, AstraZeneca – these are names that inspire a certain degree of confidence, even if that confidence is misplaced. The sheer volume of holdings in VEA suggests a commitment to diversification, or perhaps merely a lack of conviction.

One notes that both funds, in their pursuit of global reach, inevitably encounter the same intractable problems: political instability, currency fluctuations, and the inherent unpredictability of human behaviour. The illusion of control is, of course, a powerful one.

The Investor’s Predicament

The recent performance of international equities, while gratifying to some, is unlikely to persist. The temptation to extrapolate past returns is, as always, irresistible. VEA, with its minimal expense ratio, offers a degree of protection against the inevitable downturn. ACWX, with its broader scope and higher costs, promises greater potential rewards – and, correspondingly, greater risks. The choice, ultimately, is a matter of temperament. Those who prefer a quiet life may find VEA to be a suitable refuge. Those who crave excitement may be drawn to the more volatile charms of ACWX.

One suspects, however, that most investors will simply chase the latest trends, oblivious to the underlying realities. The herd, after all, rarely consults a map.

A Glossary of Absurdities

ETF: A complex financial instrument masquerading as a simple one.
Expense Ratio: The price of admission to the game.
Dividend Yield: A fleeting illusion of income.
Beta: A measure of volatility, largely ignored by those who cause it.
AUM: A testament to the power of marketing.
Max Drawdown: A reminder of the fragility of wealth.
Total Return: A comforting fiction.
Developed Markets: Places where the problems are merely more refined.
Emerging Markets: Places where the opportunities are often illusory.
Sector Allocation: A futile attempt to predict the future.
Large-cap Stocks: The least interesting part of the market.
Mid-cap Stocks: A gamble with slightly better odds.

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2026-01-24 16:52