Vanguard total world ex US (ASX:VEU) ETF review

VEU is Vanguards all world minus USA offering. This is a diversified fund which seeks to track the performance of the FTSE all-world es US index. This is tailored for investors who want global performance, but also have significant holdings in US stocks or otherwise are seeking diversification away from the US giants. It is worth noting for Australian investors, that VEU comprises about 5% Australian equities.

VEU portfolio breakdown at a Glance (Vanguard, 2019)

The Details

VEU is a highly diversified fund, comprising 3101 stocks with a market capital of (USD) $37 Billion (August, 2019). Its top ten holdings (below) account for only 10.3% of the total fund, demonstrating its diversification.

The Management Expense Ratio for VEU is also quite low, at a respectable .09% MER. This means it just costs $9 per $10,000 invested per year with Vanguard int he VEU fund. Vanguard had recently reduced this cost from .11%, showing their commitment to rock bottom ETF funds.

VEU top ten holdings (Vanguard, 2019)
VEU sector exposure (Vanguard, 2019)
VEU global exposure (source Vanguard, 2019)

Performance

VEU has provided investors with good total returns over the long term. Capital growth has been steady but volatile, as seen below. In addition to capital growth, VEU has on average paid a 3.28% dividend – however being global shares, this has no franking credit attached to it. This is a pretty solid dividend return, which means to follow the 4% draw down rule in the retirement phase you wouldn’t need to sell many parcels of shares at all (not that selling share parcels is an issue, the capital growth of remaining shares will cover this if its done sustainably)

VEU growth (source Google)
VEU performance against benchmark FTSE all world ex-US index.

Why I own VEU

I bought VEU in an effort to diversify away from the ‘Home Bias’ of Australian shares, and hedge my bet against US shares. Although I love the juicy franked dividends of Aussie shares, I am exploring other markets to protect myself from changes within Australia; economic or legislative. Although VEU does have about 5% Australian shares, I picked it as a good way to diversify into global markets.

This fund exposes me to some global giants like Nestle, Alibaba, Samsung and Toyota. When Aussie and US shares are booming, I will quietly be loading up on VEU as per my ‘DDH’ investment strategy to build up my globally diversified Get FIRE’d! Portfolio and be less dependant on home markets.

Summary

I think VEU is a good product for a rock bottom management fee. I recognise their holdings as household name products, and want exposure to growth and earnings from those companies. Are you a shareholder in VEU or have you found another way to globally diversify?

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CaptainFI

CaptainFI

Join me in a journey to reach financial independence by making money work for us, and not the other way around. Learn how with hard work, self discipline, patience and some diligent investing, you too can reach Financial Independence and Retire... Eventually. Get FIRE'd!

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