As Investors Flee U.S. Equities, This Global ETF Is Outperforming

Key Points

• Investors are distancing themselves from U.S. equities due to AI fatigue, high tech valuations, and concerns over U.S. trade policies and federal debt.
• As a result, global equities are seeing a resurgence, with equities in developed and emerging markets outperforming their U.S. counterparts. 
• The Vanguard FTSE All-World ex-US ETF has outperformed the U.S. benchmarks this year and over the past six months, with gains of 9% and 17%, respectively. 

Since the start of the year, investors have been vacating U.S. stocks and exchange-traded funds (ETFs) in a broad-based, risk-off strategy that has benefited safe-haven assets like gold and silver, as well as global equities. 

Much of that exodus can be attributed to a flight to safety, as inventors become increasingly bearish about tech’s ever-expanding AI-fueled capital expenditures and to a sell-off in software stocks. That has helped equal-weight ETFs outperform their heavily tech-weighted counterparts in the early goings of 2026, as the market’s rotation has bolstered defensive sectors like energy and utilities. 

But it’s not just lofty tech valuations that are serving as the catalyst. Investors are also reducing their exposure to U.S. assets due to President Donald Trump’s unpredictable tariff policies, a struggling U.S. dollar, and perceived risks about the federal government’s rapidly expanding debt load. 

Get stock market SMS alerts:

Sign Up

International equities, which are often out of the limelight, have exhibited strong performances amid the ongoing "Sell America" trade. And savvy investors are gradually looking overseas for stronger market prospects. 

The ETF for Breaking up With U.S. Equities

One of those options is the Vanguard FTSE All-World ex-US ETF NYSEARCA: VEU, which tracks the performance of the FTSE All-World ex-US Index—an index composed of 2,200 stocks of companies based in 46 countries, representing both the developed world and emerging markets around the globe. 

To illustrate how popular the ex-U.S. trade—and the VEU in particular—have been, institutional ownership paints a detailed picture. Over the past 12 months, institutional buyers have injected nearly three times as much money into the fund as institutional sellers have withdrawn by a margin of more than $6 billion in inflows against just over $2 billion in outflows. 

Another clue: Current short interest is minuscule at 1.6%, or less than 12 million shares out of the nearly 736 million shares outstanding. 

That is, at least in part, due to the VEU’s strong recent performance.

Year-to-date, the fund has gained more than 9% versus the S&P 500’s slight gain of around 1%. And the VEU’s outperformance has been even more pronounced over the past six months, with the ETF gaining nearly 17% against the S&P 500’s 7%. 

A Basket of Well-Diversified Global Holdings

For investors looking to maximize their global diversity, the Vanguard FTSE All-World ex-US ETF delivers. While 14.7% of the fund’s holdings are in companies based in Japan, it also boasts sizable representation in the United Kingdom (8.2%), Canada (7.3%), Taiwan (6%), Switzerland (5.3%), France (5.2%), and Germany (5.1%). The remaining 30.6% of the portfolio is spread across 39 countries. 

Regarding sector exposure, the ETF skews heavily in favor of financials at nearly 25%, with technology (16.6%), industrials (12.1%), consumer discretionary (10.2%), and materials (7.5%) trailing behind. 

And while some investors may be hesitant at the fund’s ex-U.S. label, the companies constituting the VEU’s portfolio are—in many instances—household names. They include holdings such as Canada-based Shopify NASDAQ: SHOP, U.K.-based drugmaker AstraZeneca NASDAQ: AZN, Taiwan Semiconductor Manufacturing NYSE: TSM, Swiss pharma firm Novartis NYSE: NVS, and Chinese e-commerce giant Alibaba Group NYSE: BABA, among other familiar large-cap companies.

Looking Under the VEU’s Hood

The Vanguard FTSE All-World ex-US ETF receives an aggregate rating of Moderate Buy based on 43 analyst ratings of its companies over the past year. 

With nearly $61 billion in assets under management, the fund is highly liquid with an average daily trading volume of 4.24 million shares. 

With a net expense ratio of 0.04%, the ETF’s fees amount to less than what shareholders pay for the passively managed SPDR S&P 500 ETF Trust’s NYSEARCA: SPY net expense ratio of 0.09%. And over the past six months, investors in the former have enjoyed nearly 10% higher gains than investors in the latter. 

At around $81 per share, the VEU is trading near the top of its 52-week range. However, given the macro environment and the ongoing "Sell America" trade, there are plenty of reasons to believe this fund will continue to outperform as the market rotates away from U.S. equities and into international names.