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Vanguard FTSE Developed All Cap ex North America Index ETF (VIU)
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Vanguard FTSE Emerging Markets All Cap Index ETF (VEE)
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Vanguard Total International Stock (VXUS)
Q: I have read the following from Morgan Stanley's CIO:
- S&P 500's forward price-to-earnings ratio is over 20.4, the equivalent for the MSCI ACWI ex U.S. is around 13.5.
- That discount of nearly 35%, a 20-year low, is a two-standard-deviation event.
- Dividend yields for non-US equities are running above 3% - more than double that of the U.S. benchmark.
Do you think there is an out-sized opportunity to invest outside the US, beyond one's normal global diversification strategy? If so, what sectors, stock and/or ETF's do you recommend? Thanks.
- S&P 500's forward price-to-earnings ratio is over 20.4, the equivalent for the MSCI ACWI ex U.S. is around 13.5.
- That discount of nearly 35%, a 20-year low, is a two-standard-deviation event.
- Dividend yields for non-US equities are running above 3% - more than double that of the U.S. benchmark.
Do you think there is an out-sized opportunity to invest outside the US, beyond one's normal global diversification strategy? If so, what sectors, stock and/or ETF's do you recommend? Thanks.
5i Research Answer:
We are fine with international diversification; markets are cheap. That being said, the US remains an economic leader, with global-leading companies. We are comfortable with valuations still, considering improving earnings and lower inflation. For international allocation we do prefer ETFs, such as VIU, VXUS, VEE