While 2018 is still in its infancy, there are already signs of a prominent theme from 2017 extending into the new year.

Choose your asset allocation, automate your investments, then be patient. Investing internationally might not increase your overall returns, but it’s likely to increase your risk-adjusted returns. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free, has no trading or maintenance fees, and even allows him to set up automated target-allocated investments.

Yes, it is still early in 2018, but VSS is already out to another sizable lead over U.S. small-caps. VXUS is an ETF that gives investors broad exposure to global stock markets, while VTI is focused only on U.S. securities.

However, a globally diversified portfolio – one that held both U.S. stocks and international stocks – provided the best risk adjusted return, which is shown in the chart below: A portfolio that was globally diversified from 1970 through 2018 earned 9% annual returns with a standard deviation of 14.3% compared to a U.S.-only portfolio that earned 9% annual returns with a standard deviation of 15.1%.

on international investing that covered three main points: Most U.S. investors are highly concentrated in U.S. stocks. Staying with emerging markets for a moment, the Vanguard Emerging Markets Government Bond ETF (NASDAQ:VWOB) is a fine alternative for bond investors looking for some added income beyond the piddly yields offered by U.S. Treasuries and other developed markets sovereign debt.

South Korea is included here because FTSE Russell, VPL’s index provider, classifies Asia’s fourth-largest economy as a developed market. Vanguard Total International Stock ETF (VXUS) The other fund indicated in the report is the Vanguard Total International Stock ETF. For example, the Vanguard FTSE All-World ex-US Small-Cap ETF (NYSEARCA:VSS) jumped 30.6% last year, more than doubling the returns of the Russell 2000.

1125 N. Charles St, Baltimore, MD 21201. First, let’s get a brief overview of both funds: The funds have the following similarities: The funds have the following differences: In a nutshell: Both funds have low fees, but VXUS holds far more stocks and has a lower concentration of its fund held in the top 10 stocks. The Fund employs an indexing investment approach designed to track the performance of the FTSE Global All Cap ex US Index. Start a free trial.

The simplest way to actually earn returns is to avoid actively buying and selling funds.

These seven Vanguard ETFs can help investors add international diversity while saving plenty on pesky fees. Investors who are migrating to ex-U.S. are, not surprisingly, doing so with mostly low-cost ETFs and index funds. Year-to-date, four of the top 10 asset-gathering exchange-traded funds (ETFs) are ex-U.S. equity funds.

Bolstering the case for this Vanguard ETF are declining external financing costs for emerging markets governments. VXUS has a higher expense-ratio at 0.08% compared to VTI’s 0.03%. Here’s a look at the allocation by region: Check out this article to see which countries are classified as “Emerging Markets.”. From the studies that Meb cites, there’s clear evidence that adding international stocks to your investment portfolio is likely to lead to similar returns with less volatility and less exposure to extreme drawdowns that occasionally happen in individual countries. VXUS holds over 6,200 stocks, almost 20% of …

Below is the comparison between VXUS and VT. You may also want to check out the following VT comparisons that investors often look for on Finny. Next, let’s take a look a closer look at these differences in composition. VXUS has a lower 5-year return than VT (6.09% vs 9.78%).

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That is true when it pertains to domestic small-caps. Read more. This year, global economic growth “will be driven by emerging economies, in particular commodity exporters, with growth rates for the group as a whole rising to around 4.5 percent in 2018 and an average of 4.7 percent in 2019 and 2020,” Reuters reports, citing the World Bank. As is par for the course with many Vanguard ETFs, VT is attractively priced. All rights reserved.

An easy solution to this problem is to add foreign stocks to your portfolio. . The Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO) is the largest emerging markets ETF trading the in the U.S., and a big reason why is that this Vanguard ETF is also one of the cheapest funds tracking developing economies. The Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in developed and emerging markets, excluding the United States. The historical returns of the two ETFs are comparable , although SCHF did slightly better over the last 5 years ( 9.52% for SCHF vs…

I’ll take a look at the composition and historical performance of both funds, and offer some helpful advice on how you can decide which mix of the two funds might be optimal for you. However, there is diversification across sectors. Australia and South Korea for another 28.5% of VPL’s roster. If I were an American and wanted to invest 100% in stocks I'd put 90% of my portfolio in VT (or something equivalent in a mutual fund). Investor and author Meb Faber once shared an excellent tweetstorm on international investing that covered three main points: Check out this post for a full summary of the tweetstorm.

Below is the comparison between VXUS and VT.

Europe is the largest regional exposure at 38.1%. For devotees of the famed Vanguard Total Stock Market ETF (NYSEARCA:VTI), the international equivalent to that fund is the Vanguard Total International Stock ETF (NASDAQ:VXUS).

VXUS will likely offer slightly higher returns along with slightly higher volatility compared to VEU simply because it contains small cap stocks.