Earlier in March, I covered just how quickly Vanguard has grown as an ETF industry titan. In 2023 alone, Vanguard swelled to just over $2 trillion U.S. dollars in assets under management, or AUM, spanning a suite of 81 low-cost equity and fixed-income ETFs.
A particularly popular ETF in Vanguard's lineup is the Vanguard Total World Stock ETF (VT), which offers globally diversified, market-cap weighted equity exposure for just 0.07% in expense ratios. As of March 31st, 2023, VT has accrued around $26.4 billion AUM, making it the largest global equity ETF in the U.S.
That being said, competition in the ETF industry is good. VT might be a solid investment, but that doesn't mean investors must default to it. VT has many perks such as low fees, economy of scale, and the Vanguard name, but it doesn't mean it is the only choice out there.
For those looking for a viable tax-loss harvesting partner for VT, or a spin on global equity investing, the following ETFs might be worth a look:
SPDR Portfolio MSCI Global Stock Market ETF (SPGM)
SPGM hails from State Street (NYSE:STT) Global Advisors' "Portfolio" series of ETFs, which as their name suggests are intended as low-cost core building blocks in a portfolio. SPGM is their globally diversified offering, tracking the MSCI ACWI IMI (LON:IMI) Index for a 0.09% expense ratio. Compared to VT, SPGM differs by using a MSCI instead of a FTSE index, and also has fewer holdings.
Still, the market-cap weighted nature of both indexes means that historically, SPGM has performed very similarly to VT. Over the trailing 10 years as of April 30th, 2023, SPGM has returned an annualized 8.53%, whereas VT returned 8.11%. The discrepancy in performance can be attributed to SPGM's higher weighting in large-cap stocks due to the MSCI indexes' methodology.
iShares Global 100 ETF (IOO)
What if you wanted to just track the 100 largest global equities? The solution here is IOO, which tracks the S&P Global 100 Index. This ETF is fairly long-lived, having been around since December 2000 and has attracted just over $3.7 billion in AUM. However, it is significantly pricier than VT and SPGM at 0.40%. Still, not many ETFs offer the same global mega-cap exposure as IOO does.
Currently, IOO's portfolio is skewed towards the U.S. at 71.70% due to the concentration of mega-cap stocks there. Another consequence of this is a higher weighting towards the technology sector at 31.15%. Unsurprisingly, IOO has outperformed both VT and SPGM over the trailing 10 years, returning an annualized 10.12% thanks to U.S. large-cap tech growth.
iShares MSCI World ETF (URTH)
Emerging market equities (countries like China, Brazil, and India) currently comprise around 10% of the global market, but not every investor likes them. For example, consider the plight of Russian equities last year during the invasion of Ukraine, which saw numerous country-specific ETFs shut down. Or the decimation of Chinese education technology stocks after the country cracked down on the industry.
For those looking to invest internationally with a single ticker, but avoid international stocks, the ETF to consider is URTH. This ETF tracks the MSCI World Index, which only holds U.S. and developed market equities in an approximate 67% U.S. and 33% international developed allocation. It also charges a fairly reasonable expense ratio of 0.24%.
This content was originally published by our partners at ETF Central.