Vanguard FTSE Developed Markets Index has a market-cap-weighted portfolio that holds nearly all stocks in the developed international market. Its low fee and expansive portfolio make it one of the more appealing international stock funds available.
The fund tracks the FTSE Developed All Cap ex US Index. It targets small-, mid-, and large-cap stocks from international developed markets, pulling in around 4,000 names. The final portfolio weights its holdings by market capitalization. Market-cap weighting is an efficient way to size holdings because it harnesses the market's consensus opinion of each stock's relative value. Stocks that grow in size take up a larger share of the portfolio, while shrinking companies that may be struggling will have less importance.
Diversification is a strength of this portfolio, owing to its expansive target index. Unlike many competitors, it includes stocks from Canada and South Korea. The fund holds over 4,000 stocks, with its 10 largest positions accounting for just 11% of assets. No one position accounts for more than 1.5% of the allocation. Some of this fund’s largest holdings are European multinationals like Nestle, Shell, and LVMH Moet Hennessy Louis Vuitton.
Emerging markets stocks are a small part of the opportunity set that this fund misses. While they usually constitute less than 10% of competitors in the foreign large blend Morningstar Category, this fund is not positioned to reap the rewards should they perform well. However, their omission has been a buoy to fund performance lately as stocks from emerging markets have struggled in recent years. 
Low fees also contribute to strong category-relative performance. In the 10 years through September 2023, this fund’s cheapest share class outpaced the average peer by 75 basis points annually. Volatility was slightly higher, but risk-adjusted returns also looked favorable relative to the category average.

Analyst Rating

Comprehensive exposure to foreign developed markets.

Analyst

Zachary Evens

ASML Hld

National Energy Services Reunited

Moelis

Shell PLC

SAP SE

Novan

AstraZeneca

Rogers

BHP Billiton

TotalEnergies SE

The fund captures nearly all of the overseas developed market while effectively keeping a lid on turnover. It earns an Above Average Process Pillar rating.

Above Average

Process

The Vanguard equity index group boasts seasoned managers and a dedicated supporting staff well-equipped to provide tight index tracking, earning it an Above Average People rating.
Christine Franquin and Jeffrey Miller comanage this strategy. Franquin, a principal at Vanguard, has been with the firm since 2000. Miller, who has been with Vanguard since 2003, replaced Justin Hales on the strategy in July 2022. Franquin has been shared responsibility for the fund since 2016. Vanguard frequently rotates its managers to promote breadth and depth across the team—we do not expect the manager change to disrupt the strategy in any way.
The managers are responsible for the fund's trading, providing more portfolio insights than a stand-alone trader. They are supported by a global team of dedicated personnel and sophisticated, scalable technology that optimizes precision and reduces managers' workload. Vanguard's independent risk management team works closely with the managers to monitor trades and review any potential issues. Managers' compensation is tied to performance using a combination of tracking error and excess return metrics, which aligns their interests with investors'.

People

As The Vanguard Group settles on new senior leadership, it retains a High Parent rating.

Vanguard announced current CEO Tim Buckley will step down by the end of the year, marking an end to his 33 years at the firm. Historically, Vanguard has pronounced CEO retirements while simultaneously signaling who (from inside the firm) would take over. In this instance, Vanguard’s board said it will evaluate internal and external candidates in the coming months to find its next, and fifth, leader, though it also promoted CIO Greg Davis to president.

Vanguard flourished in several respects under Buckley’s leadership. Assets under management have grown by two thirds over his six years at the helm, while its asset-weighted average US fund fee ratcheted lower to 0.08% at the end of 2023. Vanguard further refined its advice business through its low-cost Digital Advisor platform and more holistic Vanguard Personal Advisor Services, and it debuted promising investment options.

Vanguard has had its share of challenges under Buckley, too. Growing its business outside the US has proved difficult, and ex US investors account for less than 10% of AUM. Between 2019 and 2023, Vanguard’s efforts to build its China business underwent dramatic shifts, with the firm ultimately abandoning plans to launch low-cost index funds there. It also ended a partnership with Ant Financial to provide advisory services to retail investors. Inside the US, customer service issues have continued to be a problem, and some of Vanguard’s newer offers, such as margin loans, seem a departure from a more-conservative approach to investing.

Vanguard retains an investor-friendly culture at its core that’s burnished by a commitment to low costs and supported by its unique mutual ownership structure and direct-to-investor playbook.

High

Parent

Vanguard FTSE Developed Markets ETF

VEA tracks a market-cap weighted index of large-, mid- and small-cap stocks from developed markets outside the US.

The fund is passively managed to provide exposure to the developed markets ex-US equity space. It holds stocks of any market capitalization.

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By: Nolan Mauk In the post-pandemic era marked by economic uncertainty, volatility, geopolitical tension, and deglobalization, one thing has been made clear: no market, sector, or asset class is immune to the effects of rapidly changing market cycles.

All-Seasons Investing: The Case for a Diversified Asset Allocation

Vanguard FTSE Developed Markets ETF has underperformed the S&P 500 but has shown modest alpha since mid-February. VEA has a compelling valuation and some foreign-developed stock markets are reaching all-time highs. VEA's low PEG ratio, high dividend yield, diversified allocation across sectors, and improved chart are positive factors.

Looking Abroad: VEA's 13.5x P/E Remains Too Cheap To Bypass

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The Magnificent Seven stocks can be exciting to watch, but not all investors want to (or are comfortable with) buying individual stocks. Six of the seven largest ETFs are Vanguard products, and some have over a trillion dollars in assets under management.

Here Are the "Magnificent Seven" ETFs to Buy in 2024 – Which Is Best for You?

The S&P 500 has rallied 17% in just over two months, and US stock valuations are "stretched." The rest of the world is lagging the US in terms of inflationary trends, central bank policy and valuations. Investors may start looking for a catch-up play outside the US, considering ETFs like Vanguard FTSE Developed Markets ETF and Vanguard Total International Stock Index Fund ETF.

VEA: Value Outside The U.S.

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After a slow start to asset gathering, U.S.-listed equity ETFs were in vogue during the summer. At the end of August, the asset category had $165 billion of net inflows, more than $125 billion for fixed income.

Equity ETFs Are Shining, But What's Next?

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There's been more talk lately about aiming for diversification through international investing, which wasn't a major topic of discussion for a while.

VettaFi Voices On: International Investing's Revival

Vanguard FTSE Developed Markets ETF offers diversification in developed foreign markets as an alternative to U.S.-centric investments. VEA has trailed the S&P 500 due to limited exposure to high-growth sectors, but may benefit from a credit event. VEA provides diversification and attractive valuation compared to U.S. stocks, but caution is advised due to momentum weakness and Federal Reserve policy.

VEA: A Developing Downtrend Internationally Before Another Run Higher

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The more I write about investments, the more I'm convinced the average investor should focus on must-buy ETFs rather than must-buy stocks for their investment portfolios. The reality is that ETFs are less volatile than stocks.

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Nearly all major asset classes experienced gains in the week through June 2, except for commodities, which saw a fractional decline. Vanguard Real Estate Index Fund rose 3.4% last week, marking its first weekly increase in over a month.

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At the present time, I am maintaining a cautious outlook, with my portfolio split almost evenly between cash, bonds, and equities. With respect to the equity portion, I continue to be diversified between U.S. and international stocks.

VEA: Quite Possibly The Sweet Spot In Equities

Foreign developed equities have outperformed most areas of the global market this year. With solid earnings trends despite macro risks and still-attractive valuations, I'm upgrading VEA to a buy.

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While demand for U.S. equity ETFs has picked up in April, international equity funds continue to experience relative strength. Year-to-date through April 21, international equity ETFs gathered $33 billion compared to just $6.5 billion for domestic equity products.

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Like you, I have been consuming the daily feeds documenting the restacking of global capitalism. Normally, I'd engage in a bunch of rabbit hole-diving to highlight the hidden stories under the hood of what's shaping up to be one of the largest banking crises in history.

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Foreign stocks have been a poor place to allocate capital for almost 15 years. Weakness versus the S&P 500 persisted for much of 2022, but recent price action favors VEA.

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I recently raised the cash level in my personal portfolio to 25%. In a related article, I proposed that we were in "the 5th inning," to borrow a baseball metaphor. In that article, I featured the importance of diversification, and shared a recent Vanguard outlook that suggested that global equities should be included.

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News for Vanguard FTSE Developed Markets ETF ETF (VEA)