The exchange-traded fund (ETF) Vanguard All-World ex-US Shares Index ETF (ASX: VEU) has managed to buck the trend of the last few weeks. The Vanguard ETF is up more than 6% in 2025 to date and hit a 52-week high of $98.66 on Friday.
Meanwhile, some other funds that are focused on US shares have declined. For example, the Betashares Nasdaq 100 ETF (ASX: NDQ) has fallen 6% this year, while the Global X Fang+ ETF (ASX: FANG) has dropped close to 9%.
As the name of the VEU ETF suggests, it is about giving Aussies exposure to the global share market but excluding US shares.
It's interesting to see the performance of the non-US global share market and the US share market diverge. I could speculate that it may have something to do with the tariff trade war that is building between the US and various countries.
But, regardless of the reason why the market has been volatile, let's have a look at why the VEU ETF is attractive.
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Exposure to different geographies
A wide array of countries are represented within this Vanguard ETF's portfolio, including places like Asia, the Middle East, Europe, and South America.
There are numerous countries with a weighting of at least 1%, including Japan (15.9%), the UK (9.7%), China (8.4%), Canada (6.7%), France (6.6%), Switzerland (5.9%), Germany (5.7%), India (5.7%), Taiwan (5.5%), Australia (4.9%), South Korea (2.7%), the Netherlands (2.7%), Sweden (2%), Italy (1.9%), Spain (1.7%), Denmark (1.6%), Hong Kong (1.3%), Saudi Arabia (1.3%), and Brazil (1.2%).
If the next 'big' thing comes from one of those countries, this fund will give that exposure.
Of course, many of these businesses generate their earnings from across the world, not just in the country where they are listed.
Hugely diversified
There are other forms of diversification that this fund also gives, which I'd call appealing.
Firstly, the Vanguard ETF owns an enormous number of businesses. According to Vanguard, it owns more than 3,800 positions in the portfolio. That's significantly more diversified than funds like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) – the VEU ETF has over 19x the number of holdings in the IOZ ETF.
It's also more diversified in terms of the sectors. While the global share market is weighted towards tech-related businesses, and the ASX is focused on ASX financial shares and ASX mining shares, the VEU ETF's holdings are spread across different sectors.
I'll list the industries that have a weighting of more than 5%: financials (23.2%), industrials (15.1%), technology (13.9%), consumer discretionary (13%), healthcare (8.8%), consumer staples (6.1%), mining (5.5%), and energy (5.1%).
I think it's pleasing to see how the fund is invested across numerous industries, reducing its risk and exposure if any particular industry has a tough period (such as oil companies or technology).
Strong businesses
This Vanguard ETF owns many businesses, and plenty of them are leaders in their country, or perhaps the world, at what they do.
I'll list the largest ten positions in the portfolio to show the sorts of names in the Vanguard ETF: Taiwan Semiconductor Manufacturing, Tencent, SAP, ASML, Novo Nordisk, Roche, Toyota Motor, Nestle, AstraZeneca, and Novartis. In my view, each of these businesses has a compelling future.
The fund hasn't produced the same level of returns as the big US tech companies over the past decade, but it did achieve a total return of 17.75% over the 12 months to 31 January 2025, showing it is capable of producing a very pleasing result for investors. Though I'm not expecting the next 12 months to necessarily be as good.
If investors are looking for investments outside the US, this could be one of the easiest ways to do so. Plus, this ETF has an incredibly low annual management fee of 0.04%.
